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Gold Rises on Worries over US Budget Talks

Wednesday, 25 September 2013 05:13 PM

Gold prices climbed Wednesday, boosted by some safe-haven buying caused by uncertainty over U.S. budget talks.

The U.S. Congress, struggling to avert a government shutdown next week, turned its attention Wednesday to the other fiscal bullet coming at it: a federal debt default. Republican leaders in the House of Representatives notified members that a vote on raising the debt limit could come as early as Friday.

The uncertain outcome of the budget talks sent U.S. Treasury bonds prices higher while U.S. equities fell.

Spot gold was up 0.8 percent at $1,332.60 per ounce at 4:03 p.m. EDT (2003 GMT). The U.S. Comex gold contract for December delivery settled up $19.90 at $1,336.20 an ounce. Trading volume was about 10 percent below the 30-day average, preliminary Reuters data showed.

Gold rose to a record $1,920 an ounce in September 2011, partly on fears over the first U.S. debt ceiling crisis, which confronted investors with the possibility that the world's biggest economy would be unable to pay interest on its debt.

"We do not envisage the gold market to revisit the same euphoria seen during the debt ceiling crisis in mid-2011. Nonetheless, U.S. debt ceiling concerns would still be viewed as positive for bullion," said James Steel, chief precious metals analyst at HSBC.

The metal also received a boost from the International Monetary Fund, which reported that central banks continued to increase gold reserves in August, with Russia buying nearly 13 metric tons. The price of bullion has fallen about 20 percent this year, after 12 years of gains.


The top U.S. derivatives regulator, the Commodity Futures Trading Commission, said on Wednesday it closed a five-year investigation into alleged manipulation of the silver market, saying 7,000 staff hours of investigation produced no evidence of wrongdoing.

Silver was up 0.4 percent at $21.76 an ounce In the physical market, consumers in top markets China and India appeared to stay on the sidelines with continued volatility in prices and expectations of further declines, dealers said.

China, the second-biggest gold consumer, is headed into a strong buying season, but market holidays next week for the National Day have kept things quiet, traders said. In India, a fresh bout of buying is expected after new rules on gold imports and exports are clarified, but buying is unlikely to return to the strong volumes of the first half of the year.

Among other precious metals, platinum rose 0.3 percent to $1,422.49 an ounce and palladium gained 0.4 percent to $720.22 an ounce.

© 2019 Thomson/Reuters. All rights reserved.

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Gold prices climbed Wednesday, boosted by some safe-haven buying caused by uncertainty over U.S. budget talks.
Wednesday, 25 September 2013 05:13 PM
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