Gold prices rise on U.S. shutdown end… recover to the $4,200 level

Ahead of the lifting of the U.S. federal government shutdown (temporary work stoppage), international gold prices recovered to the $4,200 level again after about 20 days.

On the 12th (local time), Bloomberg reported that the spot price of gold was $4,202.58 per ounce, up 1.83% from the previous trading day. December-delivery gold futures also closed at $4,204.80, up 2.1%. It is the first time gold has surpassed $4,200 since the 21st of last month.

This rise is attributed to a sharp fall in U.S. Treasury prices ahead of a vote on a bill to lift the federal government shutdown. The 10-year U.S. Treasury yield was 4.083%, down 3.4bp (0.034%p). Generally, declines in Treasury yields drive gold prices higher.

The prospect of the federal government restarting also moved the market amid expectations that paused economic data releases will resume. In particular, statistics from a private employment data firm recently showed signs of weakness in the U.S. labor market, increasing the likelihood of a Federal Reserve (Fed) policy rate cut, analysts say.

Bart Melek, head of commodity strategy at TD Securities, said, "If the government restarts and data releases resume, signs of a slowdown in the U.S. economy are likely to become more evident."

According to the Chicago Mercantile Exchange (CME) FedWatch tool, at the Federal Open Market Committee (FOMC) meeting scheduled for the 9th–10th of next month, the probability of a 0.25%-point rate cut was 60.1%, and the probability of no change was 39.9%.

Meanwhile, international silver prices also surged. Silver spot jumped 4.6% to $53.58 per ounce, marking the highest level since the 17th of last month.

Jang Ji-min, Hankyung.com guest reporter newsinfo@hankyung.com