As the U.S. budget impasse is continuing, gold prices are up and the dollar is trading lower in Asian trading today. In today’s trading, the USD is faring worse and it is close to an 8-month low against its peers. Lower USD is helping investors buy more gold for less money and that is a reason that gold prices are going higher.
Apart from gold, the prices of silver and palladium increased too. Reportedly, platinum added to gains on Monday after a 1.3 percent increase on Friday. Platinum’s gain is due to mine strikes and curbs that are threatening the supply.
Bernanke Says He does Not Understand Gold Prices
Gold is unpredictable and that is now even admitted by Ben S. Bernanke, the world’s most-powerful central banker who holds degrees from Harvard College and the Massachusetts Institute of Technology. He says that he doesn’t understand gold prices and admits that if his peers had paid attention, they might have stopped expanding reserves that lost $545 billion in value since the bullion peaked in 2011.
Bernanke had earlier told the Senate Banking Committee in July that nobody really understands gold prices and he does pretend to really understand them either. If his statements are evaluated and the recent fluctuations in gold prices are taken into consideration, he is saying it right. For instance, gold recently lost some of its safe-haven appeal after geopolitical tensions in Syria eased; however, it is up now amid the U.S. budget impasse.
Not the Budget Impasse but Debt Ceiling Default an Issue
On the other hand, according to investors though the U.S. shutdown did not spark a lot of safe-haven bids, they are worried about the prospect of a debt default which may generate huge financial crisis. Additionally, sentiment remains hesitant towards gold; its prices are fluctuating a lot.
According to some investors though budget impasse may not have impact on gold prices, the risk of a debt ceiling breach holds scope to spark interest given gold’s response in 2011. They also believe Chinese demand to be good at the current price levels as the country buys gold whenever the prices go lower.
India is another big buyer of gold and as the festive season has just begun, it will buy more gold, particularly if it falls below $1,300. The Indian government has decided to clear more than a tonne of gold stuck at airports; Indian importers were ready to process.
To contact the reporter of this story: Jonathan Millet at email@example.com