Choppy Week For Gold As US Shutdown Continues

Gold Prices Set to Climb The partial shutdown of the US government caused by a budget impasse in the US Congress caused wide oscillations in gold and other precious metals this week.a

As Gold Investing News went to press Thursday, the shutdown was in its third day, with about 800,000 government employees off their jobs, while aaseries of non-essential government services remained closed. It's the first time in 17 years that the US government has had to close services due to a failure by the Senate and the House of Representatives to agree to a budget.

The shutdown occurred after a spending bill freighted with Republican-sponsored provisions, meant to delay parts of the Affordable Care Act, known as "Obamacare", failed to win support in the Democrat-controlled Senate. The government is now eyeing Oct. 17 as the date when Congress must agree to raise the country's $16.7 trillion debt ceiling or face a potentially catastrophic default on its bills.

A break in the impasse does not appear likely in the coming days.

"It looks pretty bleak to me," Matthew Baum, professor of public policy at Harvard University's John F. Kennedy school of government, told CBC News.

Gold closed the week at $1,328 an ounce on Monday, ahead of the anticipated shutdown on Tuesday. When the shutdown came, investors cast aside gold's safe-haven status in times of economic crisis, bidding the metal down close to $40, or 3 percent, to a seven-week low of $1,289.25. Factors working against gold that day included: a large COMEX sell order early on Tuesday; technical vulnerability to the $1,300 resistance level; diminished gold demand from Asia due to China's Golden Week holiday; and disappointment that the Oct. 1 debt deadline didn't create a rush of safe-haven investors, reported MINING.com. Stocks rallied on investor sentiment that the shutdown would likely be shortlived and would present a buying opportunity.

It was a different story for gold on Wednesday, however, with gold futures climbing $30.16 to $1,316.80 an ounce. Kitco reported that short covering, bargain hunting and safe-demand were all factors in the bounce-back. On Thursday gold took a hit, falling as low as $1,302.70, then moved up nearly to $1,320, before levelling off to close the day at $1,316.40 on the spot market.