Gold ticks up as US government shutdown begins

Reuters  Singapore, October 01, 2013

First Published: 12:07 IST(1/10/2013) | Last Updated: 12:17 IST(1/10/2013)

Gold edged higher on Tuesday as the US government shut down some of its operations after Congress failed to agree on a spending bill, but gains were limited as investors believe the stand-off will likely soon be resolved.
After missing a midnight deadline (0400 GMT), US federal agencies were directed to cut back services because of partisan deadlock in Congress over Republican efforts to halt President Barack Obama's healthcare reforms by using a temporary spending bill.
The impasse also raised concerns over whether Congress can meet a more important deadline in mid-October to raise the debt-ceiling limit.
Gold gained early on Monday on safe-haven bids surrounding the shutdown, but pulled back as buying slowed despite a weaker dollar.
Spot gold was up 0.13% at $1,328.70 an ounce by 0606 GMT on Tuesday.
"Should the political wrangling continue over the debt-ceiling negotiations mid-month, this could provide the impetus for gold to break out of its $1,300 to 1,350 range," said Victor Thianpiriya, an analyst at ANZ in Singapore.
"The market is not putting on a big net position which makes me think that when we get a breakout, it is likely to be sizeable."
A Sydney-based trader said gold was not seeing much safe-haven buying as the issue was likely to be resolved soon and there was not much upside to gold beyond that.
The last time the US government shut down in 1995/96, gold - which was then trading at less than $400 an ounce.
NITESH KUMAR SINGH
PGDM 1ST