After two weeks of steady decline thanks to the government shutdown, gold and silver have finally see the spot price corrections that many people were anticipating now that budget and debt ceiling deals have been reached. Now comes the time where we find out whether Congress can formulate a long-lasting budget as well as whether or not they can raise the debt ceiling high enough to not have to argue about it for a while.
Gold and silver spot values are also being pushed forward by a US Dollar which has been declining fairly rapidly over the past few days.
What to Expect From Precious Metals Going Forward
After 16 straight days of partial shutdown, the US government finally opened for business on Thursday. In response, US and European stock markets declined in value a bit due to the temporary nature of the debt ceiling and budget resolutions. The last-minute agreement reached by Democrats and Republicans in Congress was formulated during the day on Wednesday and subsequently signed Wednesday night. While this is seen as a partial success story, the budget is only able to fund government operations until mid-Janury while the debt ceiling was only raised until early February. This all translates into the possibility of us facing another partial government shutdown in only a few month’s time.
The temporary nature of the agreements saw precious metals’ spot values move forward significantly, while investors expressed more wariness in regards to stocks and bonds.
As an increasing number of investors begin to understand that the deals that were so highly touted yesterday are really on temporary fixes. the more likely it is that we will see a rise in safe-haven demand for precious metals. Perhaps adding even more support to the thought that spot prices for gold and silver will soar over the next few months is the fact that the US government is going to see its 4th quarter growth diminished significantly as a direct result of the shutdown. How big those negative impacts will be is merely being speculated about now, though as the month of October comes to an end we will have a clearer image of just how the shutdown hurt the overall US economy.