Emperors With No Clothes – From Nero To Nixon To Obama
Friday, 4 October 2013
Andy Smith, Independent Analyst at LBMA Rome, 2013
Gold is being supported by the U.S. government shutdown and potential October 17th default that threatens to hurt fragile U.S. and global economic growth, increasing bullion’s safe haven appeal.
Some buyers are allocating to gold prior to the deadline in order to hedge potential market turmoil.Gold’s 1.2% loss for the week so far is largely due to a single massive Comex futures sell order on Tuesday that quickly sent the price below $1,300 an ounce, but it quickly recovered as the budget impasse in Washington dragged on.
The COMEX paper speculators hold sway for now but physical supply and demand, the psychology of the investment public, and gold buyers internationally will dominate again soon.
With Chinese markets closed for the National Day holiday through Monday and no major U.S. data expected due to the shutdown, gold was vulnerable to another sell off last night, but it did not; rather it kept in a tight range during Asian hours and in early European trading.
Many federal agencies have stopped collecting and publishing data after Congress failed to agree on a spending bill. Federal Reserve officials said this week that the lack of data was making it difficult to read the economy and the Fed might have to keep monetary policy easy for longer to help offset the harm caused by the political fighting in Washington.