Gold Rallies as U.S. Lawmakers Fail to Reach a Budget Agreement
Gold managed to rally during this morning’s trading session. This is after the yellow metal experienced very heavy losses yesterday. Gold futures slipped by about $20 on Thursday, as there was a lot of negative sentiment over the ongoing Eurozone debt crisis.
Gold futures are higher today by several dollars at the $1,699 level.
The commodity was unable to capitalize on the release of positive retail sales and unemployment data from the U.S. economy during Thursday’s trading session. It may have been the case that the greenback was too strong, which is important to take into because gold is prices in dollars.
Therefore, the very strong dollar pushed the demand lower for gold. Gold has been under a lot of downward pressure in recent trading days. Investors have decided to take out their profits, as they feel that the precious metal has hit a lot of resistance lately.
The good news is that gold is higher today on the inability of President Obama and Congress to agree on a budget for 2013. This has been in the headlines for a while, but the longer it takes, then the harder it will be for the U.S. economy.
Gold will continue to be driven by U.S. and global economic events today. It is important to take into account that gold futures have been boosted this morning by a much weaker dollar. This does not necessarily mean that the latest gains for gold will be extended. This is why traders may want to trade the precious metal cautiously during Friday’s trading session.