Gold Prices Climb As U.S. Government Shutdown Continues
(Kitco News) - Gold edged up in its initial reaction to the U.S. government shutdown as Asian markets opened on Monday.
Spot gold on Kitco.com was last at $1,334.10, up 0.26% on the day.
Markets were digesting the latest headlines as U.S. Republican and Democratic Senators were holding talks on Sunday to break the political stalemate.
The Senate is scheduled to vote on the proposed bill to extend government funding through February 8 at 1 a.m. EST on Monday, said Senate Republican leader Mitch McConnell.
The U.S. federal government was forced into shutdown at midnight on Friday after federal funding was not extended due to differences on immigration issues between Republicans and Democrats.
“I wouldn’t rule out anything now, positive or negative. But I think it’s going to be positive,” Senator Johnny Isakson said.
The new deal on the table reportedly includes a promise by the Republican Party to look at Democrats’ immigration concerns in the next few weeks, Reuters reported.
“We’re going to open the government and solve immigration at the same time,” said Republican Senator Lindsey Graham.
In the meantime, the U.S. dollar index continued to trade near three-year lows, last seen at 90.51, down 0.18% on the day.
Majority of analysts interviewed by Kitco News estimate for gold to climb next week.
“We are getting into a silly season in America, where we could be having a government shutdown, which will hurt the U.S. dollar and support gold,” Bart Melek, head of global strategy at TD Securities, said on Friday.
But, according to historical statistics, gold bulls should not get too excited, as gold prices have a tendency to go down during government shutdowns. Kitco’s latest feature on the topic shows that during the last three shutdowns, gold has actually lost ground.
If the government shutdown continues, American citizens can expect the closure of all “nonessential services.” Services like economic data releases, museums, federal parks and monuments will be closed and employees will be put on temporary unpaid leave.
But, military, social security services, and the U.S. postal service will continue to operate.