Gold jumps, luring investors with low prices
FRANKFURT (Oct 17) Gold futures jumped above the $1,300 an ounce mark on Thursday on bargain hunting, as investors were attracted by lower prices that have been falling since the beginning of the year.
Gold futures for December delivery rose 1.73% to $1,304.60 an ounce at the time of writing, while silver copied the upward direction and was seen 1.80% higher at $21.750 an ounce.
Between October 10 and 15, gold hiked up 5.5% as investors took into consideration the possibility that the US Congress may let the country fall into default.
Gold is heading towards its first annual loss since 2000. The precious metal has lost around 24% since the beginning of this year, as it was hit firstly by a massive sell-off in April, then sought incentives later this year amid the fog surrounding the US Federal Reserve's (Fed) easing policy.
During the two days from April 12 to 15 it lost around 13%, experiencing its steepest fall in 30 years, plummeting to a level seen almost three years back. Later in the year, uncertainties in the US, tied with speculation over the Fed's easing policy tapering, weighed on market sentiment.
Holdings in the SPDR gold trust, which is the world's biggest bullion-backed exchange-traded product, fell to 889.13 tons. This is the lowest reading since February 2009. The gold trust has lost about 17 tons since the beginning of the shutdown, and shows a 15-ton decline for the whole of September.
The US dollar index, measuring the relative strength of the greenback against a basket of six major currencies, dropped 0.67% to 79.9290 at the time of writing. The US dollar and gold correlate indirectly, meaning a weaker US currency is supportive of gold prices.
Shutdown ends just in time
Sixteen days of partial government shutdown caused by incapacity of the members of the Republican and Democratic parties to agree on raising the US debt ceiling and health care issues, ended on Wednesday evening when Congress finally managed to pass bipartisan legislation.
The document raises the nation's $16.7 trillion debt limit and unlocks funding for the government until early 2014. President Barack Obama signed the legislation into law just after midnight.
The legislation gained substantial support on both sides of Congress, even though it left the administration's healthcare reform, commonly known as Obamacare, intact. Republicans have been trying to defund or at least postpone it.
Congress made its move just a few hours before the October 17 deadline when the Treasury's ability to borrow money would lapse.
In the Senate, 81 legislators voted for the bill while 18 opposed it, with one senator abstaining. In the House of Representatives, the Republican stronghold, the measure received 285 Yays to 144 Nays.
The law raises the debt ceiling until February 7 and funds the government until January 15. It establishes a budget conference that has to present a long-term fiscal plan by December 13. It also introduces stricter income verification for subsidies under the Obamacare healthcare reform.
US government workers are to return to their jobs today, the White House Office of Management and Budget said.
