Gold-linked ETFs were glowing brighter today as the price of the precious metal was lifted by the re-opening of the U.S. government.
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The SPDR Gold Shares ETF (GLD) was up nearly 1% and the VanEck Gold Miners ETF (GDX) was 1.34% higher.
Gold futures rose 0.4% to $4,231.50 per ounce, while spot gold rose 0.50% to $4,231.39.
Shutdown Over
The main driver was the legislation signed by President Trump overnight to unlock the doors of the U.S. government after the lengthy 43 day shutdown crippled Federal activities and services.
One of the casualties of the closure has been the release of vital economic data such as labor numbers and inflation, which help to form Federal Reserve decisions on the future direction of interest rates.
The hope, it seems, now is that the flow of data will be restored, reinforcing expectations of further interest rate cuts.
Economists said the U.S. Labor Department would now prioritize the release of November’s employment and price reports to provide the Federal Reserve with timely information ahead of its December policy meeting.
A Reuters Poll found that 80% of economists expect the Fed to cut rates by another 25 basis points next month as it seeks to cushion a slowing labor market.
Gold tends to benefit in a lower interest rate environment, as well as economic and political uncertainty.
Gold Support
“Gold is extending its winning streak driven by a weaker dollar, expectations of Federal Reserve rate cuts, and persistent central bank accumulation,” said Jigar Trivedi, senior research analyst at Reliance Securities. “While near-term consolidation is possible after rapid gains, the broader outlook remains constructive. There is scope for highs above $4,300 an ounce by year-end, provided real yields stay subdued and monetary policy remains accommodative,” he said.
Gold has been on quite the tear this year as investors flocked to it as a safe haven seeking cover from Trump’s tariffs to wars in Ukraine and the Middle East.
Earlier this week bank UBS’s (UBS) global wealth management unit predicted that gold will hold onto the $4,200 level in the next 12 months and could even hit $4,700, should risks arise on the geopolitical and financial market fronts.
“Bullion can rise further amid strong demand driven by global debt concerns, political uncertainty and the [Federal Reserve’s] policy easing,” UBS Global Wealth Management Chief Investment Office said in a report. “We remain bullish on gold, viewing it as an effective portfolio diversifier and hedge.”
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