Gold futures drop to a three-month low, giving back the prior session’s gains amid signs U.S. lawmakers are making progress in solving the issues related the to the debt ceiling and government shutdown
LONDON (MarketWatch) — Gold futures dropped to a three-month low on Tuesday, giving back the prior session’s gains amid signs U.S. lawmakers are making progress in solving the issues related the to the debt ceiling and government shutdown.
Midmorning in Europe, December Comex gold futures slumped $20.60, or 1.6%, at $1,256 an ounce. Silver futures also turned south, off 62 cents, or 2.9%, to $20.73 an ounce.
“It would appear that market participants expect yield to remain in risky assets, and the return of equities will outweigh currency depreciation,” said IG market strategist Kelly Teoh.
A day earlier, gold futures bounced off three-month lows, but they eventually closed off session highs as optimism on the shutdown front took some of the shine off the precious metal. Senate Majority Leader Harry Reid said on Monday he was “very optimistic” about concluding a deal “this week” to raise the debt limit as well as end the government shutdown. Sen. Mitch McConnell, the Republican minority leader, said he shared Reid’s feeling that “we’ll get a result that’s acceptable to both sides.”
The hopes that U.S. lawmakers will break the deadlock also supported the dollar, which in turn added more pressure on gold prices. Dollar-denominated commodities tend to move lower on a stronger U.S. currency as they get more expensive to other currency holders.
The ICE dollar index rose to 80.573, up from 80.296 in late North America trading hours on Monday.
