The gold price in the world market is poised to record its best month in 14 years as it has already shot 46 percent this year, which is placing it on its path to its best year since 1979.
The precious metal prices briefly passed through $3,800/oz on September 30, which was driven by a myriad of factors such as concerns of a looming US government shutdown, which can be utilized to lay off the ‘non-essential’ workers.
Investors took fright that the risk of a US government shutdown could also be used to postpone the US jobs data, which is due on Friday, and which is regarded as being considered in defining the direction of the rate cut by the Federal Reserve.
In a White House meeting, President Donald Trump and opponents of the Democratic Party had failed to end the crisis previously, on September 30, and Vice President JD Vance was being cautious before the deadline on Tuesday, midnight.
Vice President Vance said, “I think we’re headed to a shutdown because the Democrats won’t do the right thing.” The US budget standoffs have become a frequent standard practice at White House in Washington and are normally settled at the eleventh hour.
The Office of Personnel Management at the White House has issued a memo stating that no new federal employees would be trained or onboarded in the future after any shutdown, but those employees who manage any layoffs will be permitted to continue working, showing that the Trump administration could reduce the size of the administration, as well as who was considered an ‘non-essential’ worker, and who it could lay off.
This kind of fear, never before witnessed when the White House employs a shutdown in place of a furlough, has the potential to affect the job market and the economy, which is contributing to the uncertainty this time around.
The previous shutdown, which happened in the first year of Trump in 2018, was the longest in American history, and lasted 35 days.
According to Reuters, quoting Tim Waterer, Chief Market Analyst of KCM Trade, “The looming government shutdown creates a haze of uncertainty over the market, which has served to accelerate gold’s gains.”
Bloomberg News quoted a note by Nicky Shiels of MKS PAMP SA, “It’s internalizing an expected subdued jobs growth in September and perhaps some US shutdown threat.”
The latest economic statistics of the US have improved the hopes of further reduction in the rate in the year, driving the prices higher in a third successive quarter.
CNBC International quoted a note by Michael McLean, the public policy senior analyst at Barclays, “We have reason to think that a shutdown this time may not follow past precedent,” and could lead to new uncertainty surrounding the impact of such a development on the economy.
