Gold trades higher on extended stimulus bets
Published Oct 20, 2013 08:56PM ET
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery rose 0.22% to USD1,317.50 per troy ounce in Asian trading Monday. The December contract settled lower by 0.63% at USD1,314.60 an ounce last Friday.
Last week, gold futures surged 3.24%, good for the best weekly advance in two months. Gold futures were likely to find support at USD1,273.80 a troy ounce, the low from October 17 and resistance at USD1,330.10, the high from October 8.
Gold prices surged on Thursday as the U.S. dollar came under heavy selling pressure after the U.S. Congress passed a bill to reopen the government and raise the debt ceiling, with just hours to spare ahead of a deadline to avert an unprecedented sovereign debt default.
The deal will fund the government until January 15 and raise the government borrowing limit until February 7. Both sides also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by December 13.
The government shutdown could be boosting gold in another way. It is estimated that the shutdown cost the U.S. economy, the world’s largest, hundreds of millions of dollars per day in lost economic output.
Conventional wisdom dictates that will be reflected in the fourth-quarter GDP reports that will not be revealed until the first quarter of 2014. Traders are speculating that the Fed will not be able to taper its USD85 billion-a-month bond-buying program until March 2014 at the earliest.
Even that does not seem likely because that would mean one of Janet Yellen’s first acts as Fed chair, assuming she is confirmed to replace Ben Bernanke, would be to trim the Fed’s bond-buying efforts that she supported. Bernanke stays on through the end of January 2014.
Elsewhere, Comex silver for December delivery inched down 0.01% to USD21.910 per ounce while copper for December delivery rose 0.15% to USD3.294 an ounce.
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Written By: Investing.com
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