Gold Prices Soar to New Highs as US Shutdown Fears Intensify
Gold prices have touched a new record high, climbing above $3,839 an ounce, as concerns mounted over a potential US government shutdown. The precious metal, a traditional safe-haven asset, has seen significant gains this year, with a 46% increase in value.
US Shutdown Fears Weigh on Markets
The looming threat of a US government shutdown has investors on edge, with many seeking safe-haven assets like gold. The shutdown could hinder crucial data releases, including Friday’s nonfarm payrolls report, which is essential for the Federal Reserve’s rate-cutting decisions.
According to Kathy Jones, chief fixed income strategist at Charles Schwab & Co., ‘Given the importance of the job market to the Fed’s rate-cutting decisions, risk that the September unemployment report could be delayed could add to the market’s anxiety over the direction of policy.’
Impact on Indian Investors
Indian investors are closely watching the developments in the US and their potential impact on the global economy. The shutdown could lead to a decline in investor sentiment, affecting the Indian stock market and the value of the rupee.
As the US government shutdown looms, Indian investors should remain cautious and keep a close eye on the developments. It is essential to stay informed and adapt to the changing market conditions to minimize potential losses.
Emerging-Market Assets Climb
Emerging-market assets have climbed to start the week, as the looming risk of a shutdown weighed on the dollar. The US Treasury 10-year yield declined to 4.14%, with shutdowns typically associated with gains for bonds due to their potential to restrain the economy.
Kyle Rodda, a senior market analyst at Capital.com in Melbourne, wrote, ‘As the markets await the beginning of the final quarter of the year, the odds remain skewed to another Fed cut in October and December.’
Gold’s Gains and the Risk of a Shutdown
Gold’s gains have been significant, but the risk of a shutdown could lead to a fresh bout of turmoil. Garfield Reynolds, MLIV Team Leader, noted, ‘To some extent gold’s gains slid under the radar because record highs for the precious metal are so common now as to be completely passe. But Monday’s 2% surge from already elevated levels does speak to a degree of angst about the risk for the shutdown to deliver a fresh bout of turmoil.’
Other Market Developments
A gauge of US-listed tech shares from China surged 2% ahead of the week-long holiday in the country starting Wednesday. Investors put money into exchange-traded funds that buy Chinese stocks last week, joining a wave of optimism around artificial intelligence that has fueled a $2.7 trillion onshore equity rally this year.
China announced it’s offering 500 billion yuan ($70 billion) worth of capital to spur investment, in a long-anticipated move to boost growth after provinces likely diverted funds from projects as they borrowed more to restructure hidden debt.
Australia’s central bank will meet on Tuesday and is expected to keep interest rates unchanged. On Monday, investors also heard from a handful of Fed speakers, with St. Louis Fed President Alberto Musalem saying that while he’s open to further rate cuts, policymakers should move carefully, since inflation is still running above target.
Geopolitical Developments
In geopolitical developments, Trump and Israeli Prime Minister Benjamin Netanyahu said they had agreed to a 20-point plan designed to end the war in Gaza, though the prospects for peace remained unclear without the direct involvement of Hamas.
In commodities, oil pushed lower for a second session as the market weighed a looming glut and the possibility for an end to hostilities in Gaza, which could siphon some of the war premium out of prices.
Zijin Gold International Co. will start trading in Hong Kong on Tuesday after the international unit of China’s biggest miner raised $3.2 billion in the world’s largest initial public offering since May.
Electronic Arts Inc. agreed to sell itself in the largest leveraged buyout on record to a group of investors that includes a firm managed by Trump’s son-in-law Jared Kushner and Saudi Arabia’s sovereign wealth fund.
Alphabet Inc.’s Google agreed to pay $24.5 million to resolve Trump’s claims that being banished from his YouTube channel after the Jan. 6, 2021, riot at the US Capitol was illegal censorship, according to a court filing.
Huawei Technologies Co. is preparing to sharply ramp up production of its most advanced artificial intelligence chips over the next year.
Key Market Moves
S&P 500 futures were little changed as of 10:05 a.m. Tokyo time. Hang Seng futures rose 0.1%. Nikkei 225 futures (OSE) fell 0.6%. Japan’s Topix fell 0.4%. Australia’s S&P/ASX 200 rose 0.2%. Euro Stoxx 50 futures fell 0.1%.
The Bloomberg Dollar Spot Index was little changed. The euro was little changed at $1.1720. The Japanese yen fell 0.1% to 148.76 per dollar. The offshore yuan was little changed at 7.1278 per dollar. The Australian dollar rose 0.1% to $0.6584.
Bitcoin rose 0.1% to $114,484.06. Ether fell 0.5% to $4,206.56. The yield on 10-year Treasuries was little changed at 4.14%. Japan’s 10-year yield declined two basis points to 1.635%. Australia’s 10-year yield declined three basis points to 4.30%.
West Texas Intermediate crude fell 0.5% to $63.13 a barrel. Spot gold rose 0.1% to $3,838.40 an ounce.
This story was produced with the assistance of Bloomberg Automation.
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