As shutdown drags on, gold edges up

Source:Reuters Published: 2013-10-7 21:18:01

Gold nudged up in Asian trading Monday as the US government shutdown raised fears Congress may struggle to raise the debt ceiling in time, burnishing bullion's safe-haven appeal.

Failure to raise the US borrowing limit by October 17 will push the world's biggest economy into an unprecedented debt default. Congress is already divided on a spending bill, resulting in a partial government shutdown that is hurting the economy and delaying key data releases.

During the last debate over the US debt ceiling in 2011, gold hit an all-time high of $1,920 per ounce.

"These are critical events that can move the markets greatly," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore. "If we don't see any progress till the 17th, I think we will see gold spike to $1,400."

"Economic data or any news on the debt ceiling will determine the direction that gold and silver will take. Until then, it will be range bound," Lan said.

Spot gold rose 0.2 percent to $1,312.69 per ounce by 0333 Greenwich Mean Time, also lifting silver and palladium.

With no key US data coming in, traders are now eyeing any pickup in physical demand, especially from China which has been closed for a week for the National Day holidays.

Some dealers said they expected Chinese demand to be good at the current price levels, and a lot stronger if prices fell below $1,300.

Reuters

Posted in: Markets

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