October 01, 2013
Gold prices on Monday posted their best quarterly performance in a year, despite weak safe-haven buying amid uncertainty over a looming US government shutdown. Bullion gained nearly 8 percent for the third quarter, thanks to a sharp rebound rally following a record 23 percent drop in the previous quarter in which it posted a $225 two-day drop in mid April. It was also gold’s first quarterly rise since the third quarter of 2012.
Gold fell on Monday as the US Congress, still in partisan deadlock over Republican efforts to halt President Barack Obama’s healthcare reforms, was on the verge of shutting down most of the US government starting on Tuesday morning. “While this is chaotic and nerve wrecking, the market is thinking it’s not something that will go on for an extended period of time and to have a real material impact,” said Bill O’Neill, partner of commodities investment firm LOGIC Advisors.
Spot gold was down 0.5 percent at $1,328.74 an ounce by 2:42 pm EDT (1842 GMT). US Comex gold futures for December delivery settled down $12.20 at $1,327 an ounce. Despite the looming US budge crisis, gold futures trading activity was thin, with volume about 30 percent below its 30-day moving average, preliminary Reuters data showed.
Extreme fears due to the US budget crisis in 2011 helped power gold to its record high at above $1,920 an ounce in September 2011. The US Mint, which produces the American Eagle bullion gold and silver coins for investors, is not expected to be affected by any potential government shutdown because its funding does not rely on appropriations by the US Congress.
Despite its quarterly gains, gold is still down 20 percent for the year, weighed down by expectations the Fed is planning to taper its massive $85 billion monthly bond purchase. At its September meeting, the Fed stuck with its bond-buying stimulus program, surprising markets which had expected a small reduction from this month.
The Fed meets next on October 29-30. “It seems to us that the central bank will likely stand pat again, perhaps not wanting to take two completely different directional views on rate policy in the span of just 30 days,” INTL FCStone analyst Edward Meir said in a note. Among other precious metals, silver was down 0.3 percent at $21.67 per ounce, while platinum fell 0.9 percent to $1,401.06 and palladium dropped 0.9 percent to $721.75. Courtesy Reuters
Published in ZaraiMedia.com