(Kitco News) - After 43 days, the U.S. government is back in business, and while the end of the longest government shutdown in history has improved geopolitical sentiment, it has done little to stifle gold’s bullish momentum.
The yellow metal continues to see a solid recovery from last month’s sharp selloff. Spot gold is holding new support at $4,200 an ounce.
Although geopolitical uncertainty has diminished slightly, one analyst expects the focus to shift to a much bigger problem: the U.S. government’s unsustainable debt, which continues to rise as President Donald Trump shows himself to be another spendthrift politician.
Trump has once again made headlines as he promises to send Americans $2,000 checks using money raised from elevated tariffs. He has also promised $10,000 bonuses for “patriot” air traffic controllers. Trump has further floated the idea of creating 50-year mortgages.
Nicky Shiels, Head of Research and Metals Strategy at MKS PAMP, said this fiscal environment is positive for hard assets like gold and silver.
“All this is simply bringing forward stimulus to the broader economy, because the administration understands parts of the economy are slowing; it’s a preview of what's to come (stimulus) into midterms. Trump is going to run the U.S. hot at the expense of deficits & the US’ fiscal state into Nov ’26, because they must pivot more populist following recent election results,” she said in a note.
The U.S. government already has difficulty selling its debt. This week, the U.S. Treasury saw weaker-than-expected participation in both 10-year and 30-year bond auctions. Analysts note that 30-year bond sales have been soft for most of this year.
Shiels said that Trump’s 50-year mortgage idea could be the most problematic. While American consumers would have lower monthly housing costs, the interest on a 50-year mortgage would be nearly double.
“Essentially, it's just an IOM, effectively just renting a place from the bank, and importantly, it might be a path to the 50yr Treasury bond and terming out the debt,” she said.
Looking ahead, Shiels said that all this financial market uncertainty could continue to support gold and silver prices, and investors might even see a Santa Claus rally into the new year.
