Strong price gains in gold, silver as U.S. gov’t may be close to reopenin
NEW YORK (November 10) Gold and silver prices are sharply up in early U.S. trading Monday, with gold hitting a two-week high and silver a three-week peak. Notions the U.S. government may be close to reopening have boosted the precious metals markets, from the angle of the resumption of U.S. economic data flows will provide better odds of a Federal Reserve interest rate cut in December. December gold was last up $93.30 at $4,103.10. December silver prices were up $1.897 at $50.055.
The U.S. Senate on Sunday voted 60-40 on a procedural measure to advance a bill to end the federal government shutdown, with a group of moderate Democrats breaking with their party leaders to support the deal. The bill’s passage in the House of Representatives is not guaranteed due to opposition from Democratic leaders. The deal falls short of the goals of House and Senate Democratic leaders, who had demanded an extension of expiring Obamacare subsidies. Democrats secured a pledge from Republicans to vote on a bill to renew the Affordable Care Act tax credits by mid-December. The Senate adjourned until today and has not yet scheduled a vote for final passage. “It’s not yet clear how quickly the shutdown can end. The Senate will need the consent of all members to end the shutdown quickly. Any one senator can force days of procedural delays. Speaker Mike Johnson plans to give House lawmakers 36 hours’ notice to return to Washington,” reported Bloomberg. Said President Trump: “It looks like we’re getting closer to the shutdown ending,” he told reporters Sunday evening and as reported by Bloomberg.
The Sunday news the U.S. Senate is close to approving a bill to reopen the federal government rallied global stock markets, with U.S. stock indexes set to open solidly higher in New York today. U.S. Treasury yields have up-ticked modestly, as has the U.S. dollar index. Grain futures prices saw modest gains overnight, as the uncertainty from the dearth of USDA data would end when the USDA data starts flowing again. Crude oil prices did not show much reaction to the news.
Still, the U.S. government shutdown has delayed the release of key economic data, including the October consumer price index and jobs reports, which will prolong the debate about whether another rate cut is needed at the Fed's December meeting. “The absence of official reports will make it difficult for policymakers to assess the trajectory of inflation and the job market, and alternatives to government inflation figures are harder to come by and more limited in scope,” said a Bloomberg report. “The shutdown's impact on data collection and release will likely give (Fed) policymakers further reason to hold off on a rate cut in December, despite market odds still favoring a reduction, and investors will monitor appearances by Fed officials in the coming week for clues on the Fed's next move,” said Bloomberg. “Even if the government were to reopen, it’s unlikely the Bureau of Labor Statistics would be able to collect and process data for both the October and November CPI reports ahead of the December FOMC meeting. We think October’s figures would have greenlit a rate cut at the final meeting of the year,” said Bloomberg Economics.
The U.S. and China have suspended port fees on each other’s ships for one year and paused probes into maritime practices, Bloomberg reports. The Trump administration paused a probe into China’s shipbuilding industry, and Beijing shelved its own investigation and put off special port fees on U.S. vessels. The US will continue to negotiate with China about the issues raised in its investigation, according to the U.S. Trade Representative. “The stand-down in tensions over maritime issues tallies with a rapprochement in the broader confrontation between Washington and Beijing after a summit between the countries’ leaders. While shipping is not among the highest-profile issues, most global trade is carried by sea and the industry is a cornerstone of global commerce,” said Bloomberg.
The key outside markets today see the U.S. dollar index slightly lower. Crude oil prices are slightly firmer and trading around $60.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.1%.
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