U.S. futures subdued as government shutdown stretches into second week
Investing.com-- Gold prices rose in Asian trade on Tuesday, remaining close to record highs near $4,000 an ounce as haven demand was underpinned by growing political uncertainty in the U.S., Japan, and France.
Bets on more U.S. interest rate cuts buoyed metal markets, with focus squarely on a string of Federal Reserve speakers this week for more insight. Data showing increased gold buying by the People’s Bank of China also supported bullion prices.
Spot gold rose 0.4% to $3,974.57/oz after hitting a peak of $3,977.45/oz earlier in the session. Gold futures for December rose 0.6% to $3,998.12/oz by 01:02 ET (05:02 GMT), after hitting a peak of $4,000.05/oz.
Global political uncertainty boosts gold
Haven demand for gold ramped up this week, especially as a U.S. government shutdown stretched on with few signs the political deadlock in Congress will end soon.
A political crisis in France deepened after the abrupt resignation of Prime Minister Sebastien Lecornu. Lecornu was then tasked by President Emmanual Macron to negotiate a path forward for the government.
The French government could now call for a snap parliamentary election, amid growing calls from the far right and the far left for a change in governance.
In Japan, fiscal dove Sanae Takaichi was elected as the leader of the ruling Liberal Democratic Party, setting her up to become the country’s first female prime minister.
While Japanese stocks rallied on the development, the yen weakened sharply, while government bond prices fell amid doubts over just how Takaichi will fund her agenda of increased fiscal stimulus and tax breaks.
The wave of political uncertainty in the developed world kept investors largely pinned towards gold.
Other precious metals also advanced after clocking decade highs in recent sessions. Spot platinum rose 0.5% to $1,632.51/oz, while spot silver rose 0.1% to $48.5585/oz.
Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.7% to $10,724.65 a ton, while COMEX copper futures rose 0.8% to $5.0820 a pound.
Copper was boosted by major miner Freeport-McMoran (NYSE:FCX) giving no clear cues on when production at the Graesberg copper mine in Indonesia– one of the world’s biggest copper mines– will resume production after a deadly accident in early-September.
China’s central bank buys gold for 11th straight month in Sept
The PBOC added to its gold holdings in September, government data showed on Tuesday, extending its buying into an eleventh consecutive month.
The PBOC’s gold holdings totalled 74.06 million fine troy ounces in end-September, up from 74.02 million in the prior month. The value of the PBOC’s gold holdings also rose substantially in September, amid a rally in bullion prices.
Buying gold helps China diversify its foreign reserves from the dollar and U.S. Treasuries, with the country seen rapidly snapping up gold amid souring relations with Washington.