Gold futures snapped a four-day loss to end higher Monday, after trading lower earlier in the session, with investors seeking the precious metal’s safe haven status even as no solution to the U.S. budget and debt ceiling appears to be in sight. Gold also found support with the dollar trading lower against a basket of major currencies and on inflation climbing in China and India, two of the world’s largest consumers of gold. Although lawmakers in Washington have thus far failed to agree on any deal to end the partial government shutdown and avert a debt default, there was ray of hope on news that President Barack Obama set to meet bipartisan leaders later in the day to discuss the standoff.
A meeting between President Barack Obama and the House Republican leadership last Thursday failed to find any solution, although leaders from both sides had agreed to keep talking. Republicans had proposed to temporarily raise the nation’s debt limit to avoid a default and allow time for negotiations, but this was turned down by Obama since there was no solution to the budget problem. The U.S. Treasury has deemed that unless a deal is through by October 17 to raise the $16.7 billion debt limit ceiling, the world’s largest economy is likely to risk a sovereign debt default.
Gold for December delivery, the most actively traded contract, gained $8.40 or 0.7 percent to close at $1,276.60 an ounce Monday on the Comex division of the New York Mercantile Exchange. Gold for December delivery scaled an intraday high of $1,291.60 and a low of $1,268.40 an ounce. Last week, gold extended losses to settle below the $1,300-mark, even as lawmakers struggled to find a breakthrough in the budget and debt crisis, shedding as much as 3.2 percent for the week. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, moved down to 890.98 tons from 896.38 tons. The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.28 on Monday, down from 80.41 late Friday in North American trade. The dollar scaled a high of 80.39 intraday and a low of 80.13.
The euro traded higher against the dollar at $1.3566 on Monday, as compared to its previous close of $1.3562 late Friday in North America. The euro scaled a high of $1.3597 intraday and a low of $1.3544. In economic news, China’s consumer price inflation climbed to its highest level in seven months in September, while industrial producer prices fell for a nineteenth consecutive month, data from the National Bureau of Statistics showed Monday. China’s CPI inflation rate rose to 3.1 percent in September from 2.6 percent in August. Economists had forecast an increase to 2.8 percent. The rate was the highest since February, when inflation was at 3.2 percent. Producer prices fell 1.3 percent year-on-year in September, slower than August’s 1.6 percent decline. Economists had forecast a 1.4 percent drop.
Meanwhile, India’s wholesale price inflation rose unexpectedly to a seven-month high in September on higher food inflation, raising the scope for another rate hike from the central bank. Inflation, measured by the wholesale price index, increased to 6.46 percent in September from 6.10 percent in the previous month, the Ministry of Commerce and Industry said Monday. Inflation was forecast to slow marginally to 6 percent.
Source: RTT Staff Writer
Source:Bullion Bulletin