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Gold Swings Above $1,300 as Investors Assess U.S. Economy, Debt

Posted by Marge Maresca on Oct 3, 2013 9:42:00 PM

By Glenys Sim


Oct. 4 (Bloomberg) -- Gold fluctuated above $1,300 an ounce, heading for a weekly loss, as investors weighed the prospect of slower U.S. economic growth as a partial government shutdown entered a fourth day and lawmakers wrangled over the debt limit.
Bullion for immediate delivery traded little changed at $1,317.40 an ounce at 9:17 a.m. in Singapore after rising 0.5 percent and losing 0.1 percent. Bullion declined to an eight-week low of $1,277.15 on Oct. 2 before rebounding as investors assessed the government closure and its impact on the outlook for monetary stimulus from the U.S. Federal Reserve.
Prices pared losses yesterday after a report showed U.S. services industries grew at a slower pace than forecast, and the Treasury said a government default caused by Congress failing to raise the $16.7 trillion debt limit could have catastrophic consequences. Gold fell 21 percent in 2013 as holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, fell to 899.99 tons, the least since February 2009.
“Bullion may have room for gains given the political uncertainty in Washington over the U.S. budget and debt-ceiling issues,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. “However, gold’s recent price performance suggests investors see a failure to raise the debt ceiling as a low probability event.”
Prices lost 1.4 percent this week, heading for the fifth drop in six. The September payrolls report that may provide investors with clues on what the Fed will do with its $85 billion-a-month asset-purchase program, won’t be issued today by the U.S. Department of Labor because of the shutdown.
Bullish Outlook
Traders and analysts are bullish for a third week, the longest positive run since July, with 18 respondents in a Bloomberg survey expecting gold prices to rise next week, compared with eight who were bearish and four neutral.
Gold for December delivery rose and fell 0.2 percent, and traded little changed at $1,317.90 an ounce on the Comex in New York. Trading was 64 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Silver for immediate delivery was little changed at $21.6885 an ounce, down 0.5 percent this week. Platinum gained 0.3 percent to $1,376.32 an ounce, paring its sixth weekly loss, the longest losing run since April. Palladium added 0.1 percent to $702.43 an ounce, trimming the first weekly drop in a month.


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