U.S. Treasury “Firm Believers In Gold”, Will Not Sell Even To Avoid Default
Thursday, 10 October 2013
Gold edged off, falling beneath $1,300/oz in London as the dollar bounced from an eight-month low on hopes that the considerable risks due to the U.S. government shutdown and debt ceiling are addressed.
COMEX selling continues to pressurise the price despite robust demand especially from China and India. Premiums in India were at $50 per ounce overnight and on the Shanghai Gold Exchange premiums were at $21 per ounce overnight.
President Barack Obama launched a series of White House meetings with lawmakers yesterday to search for a way to end a government shutdown and raise the debt limit. Congressional aides from both parties noted U.S. lawmakers are not opposed to a short term increase in the debt ceiling limit.
The U.S. will almost certainly raise the debt ceiling again, as it has done dozens of times since 1960, and this will be very bullish for gold as it has been in the last 10 years (see chart).
Gold fell despite monetary dove, Janet Yellen, being nominated as the next chief of the U.S. central bank. Her appointment is positive for gold and will be supportive.
Central banks remains net buyers and gold sales remain nearly non existent. Gold sales under the Central Bank Gold Agreement in the year to September 26 were the lowest of any year since the first version of the pact came into force in 1999, World Gold Council shows.