Gold futures trade near 8-week low with U.S. govt shutdown in focus
FRANKFURT (Oct 2) Gold futures traded near an eight-week low during European morning hours on Wednesday, as concerns over a U.S. government shutdown continued.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,288.30 a troy ounce during European morning hours, up 0.2%.
Earlier in the session, prices slumped to a daily low of USD1,276.90 a troy ounce, the weakest level since August 7, before rebounding to a session high of USD1,293.20 a troy ounce.
The December contract ended 3.1% lower on Tuesday to settle at USD1,286.10 a troy ounce.
Gold futures were likely to find short-term support at USD1,272.10 a troy ounce, the low from August 7 and resistance at USD1,337.80, the previous session’s high.
The U.S. government began a partial shutdown after lawmakers failed to reach an agreement on a new budget before Monday's midnight deadline. Republicans have insisted on delaying the implementation of President Obama's health care reforms as a condition for passing the budget.
A partial shutdown of U.S. federal government operations was expected to delay economic data releases this week, including Friday's highly-anticipated non-farm payrolls report.
According to an Obama administration official, the Labor Department will postpone the release of its monthly employment report if the federal government remains closed.
Later this month, Congress will have to extend the USD16.7 trillion debt ceiling, which the Treasury Department has estimated will be reached by October 17.
Moody's Investors Service warned that a failure to raise the debt limit would result in a worse outcome for financial markets than a government shutdown.
Gold prices were also weighed by a bearish technical picture. Losses accelerated on Tuesday after prices broke below key support levels close to the USD1,305-level, triggering a flurry of automatic sell orders.
Elsewhere on the Comex, silver for December delivery fell 0.5% to trade at USD21.06 a troy ounce, while copper for December delivery declined 0.65% to trade at USD3.253 a pound.
