Washington remains in tight gridlock as gold investors eye the U.S. debt ceiling deadline next Thursday, October 17th. Negotiations will grow tenser by the hour as we quickly approach the definitive date for the government to meet its obligations. A failure to reach an agreement would send shock waves through the U.S. and international markets.
The yellow metal traded in a fairly narrow range this week over the ongoing wrangling in Washington. Gold was contained between the $1300/oz. to $1320/oz. levels for the majority of the week before finishing slightly lower on the news of a new House Republican proposal that would at least temporarily avert a default and end the government shutdown. However, any temporary solution will just kick the can down the road – leading to further negotiations.
As negotiations intensify next week, gold should receive added support and will climb to the upside the closer we get to the deadline and default. Investors will be sharply focused on Washington for any indication of an agreement, whether it be temporary, long-term, or possible default.
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- Jon “Dr. J” Najarian, Capital Gold Group Senior Economic Analyst