Gold at 3-month low amid US stalemate development
FRANKFURT (Oct 15) The precious metal dropped to the lowest level since the beginning of July amid hopes for a successful ending of the ongoing US government shutdown.
Gold futures for December delivery plunged 1.56% to $1,256.80 an ounce at the time of writing. Silver performed in line with its yellow peer, sinking 2.79% to $20.760 an ounce.
Gold could book its first annual loss in 13 years as speculation over whether the Federal Reserve will taper its easing policy or not has weighed on market sentiment. Gold has lost 24% since the beginning of this year.
Gold prices were partially impacted by the strengthening of the US dollar on Tuesday as the US dollar index, measuring the relative strength of the greenback against a basket of six major currencies, edged up 0.38% to 80.566.
Holdings in the SPDR gold trust, which is the world's biggest bullion-backed exchange-traded product, fell to 889.13 tons. It is the lowest reading since February 2009. The gold trust lost about 17 tons since the beginning of the shutdown, and showing a 15-ton decline in the whole of September.
US budget hopes
The Monday meeting between President Barack Obama and Congressional leaders was postponed to secure Senate enough time to continue its progress towards a solution to raise the debt limit and reopen the government, according to a statement by the White House.
Harry Reid, Senate majority, leader said that there had been made 'tremendous progress' during Monday's talks.
The president stated earlier in the day that there are signs of progress in the Senate. "My hope is that a spirit of cooperation will move us forward in the next few hours," he said.
The partial government shutdown in the world's largest economy entered its fifteenth day on Tuesday as US lawmakers failed to reach an agreement in talks over the weekend.
"We remain confident that a deal on the debt ceiling will be reached before a Treasury default," analysts at Societe Generale wrote in a note.
"Any agreement is unlikely to be swift in the finalization - with a significant probability that it will come after Thursday's debt ceiling deadline has passed - and also still seems more likely to offer a temporary rather than lasting solution to the impasse," economist at Daiwa Capital Chris Scicluna wrote in a note.
