Gold snaps highest close since September start as US shutdown looms

Gold prices turned to gains at settlement today, Sept. 18, as markets assessed the path of monetary policy by the Federal Reserve, amid growing fears of a potential US government shutdown in less than two weeks.

Earlier today, US Treasury Secretary Janet Yellen said she saw no signs the US economy is entering a downturn but warned that failure by Congress to pass legislation to keep the government running risked slowing momentum in the economy.

On Sept. 17, US House Speaker Kevin McCarthy indicated his plan to bring a defense spending bill to a vote “win or lose” this week, with a possible partial US government shutdown looming in two weeks, Fox News reported.

The spread between the gold price in Shanghai and London stock exchanges narrowed today to $76 per ounce after the People’s Bank of China relaxed curbs on imports of the yellow metal last week, the Financial Times reported, citing people familiar with the informal order.

The Republican-led House and Democratic-controlled Senate have until Oct. 1 to avert a partial government shutdown in the US by enacting appropriations bills that President Joe Biden, a Democrat, can sign into law, or by passing a short-term stopgap spending measure to give lawmakers more time for debate.

On Sept. 20, markets are awaiting the decision of the Fed’s two-day monetary policy meeting. Forecasts suggest that the US central bank would leave interest rates unchanged at the current 5.25-5.50% range.

In terms of trading, bullion for December delivery held steady at $1,947.30 per ounce at 11:55 am Makkah time.

Upon settlement, gold futures contracts for December delivery logged an increase of 0.35%, or $7.2, to finish at $1,953.40 per ounce — the highest close since the start of September, after touching $1,945.70 in early trading.

On the other hand, the US dollar index, which measures the performance of the US currency against a basket of six major currencies, contracted by 0.25% to 105.08 points at 08:50 pm Makkah time.