Gold analysts are bullish for a third consecutive week on speculation that the first US government shutdown in 17 years and a standoff over raising the country’s debt limit will spur demand for the metal as a haven.
Eighteen analysts surveyed by Bloomberg expect prices to rise next week, eight are bearish and four neutral.
That’s the longest positive run since July. Bullion capped a 7.6 per cent gain last quarter, the first in a year, as the US Federal Reserve unexpectedly refrained from tapering its US$85 billion-a-month bond-purchase programme.
Gold, heading for its first annual drop in 13 years after some investors lost faith in the metal as a store of value, rose as much as three per cent during the three-week US shutdown that began in December 1995.
The Bloomberg US Dollar Index neared a seven-month low on concern the stalemate may weaken economic growth and postpone the tapering of stimulus.
Bullion rose 70 per cent from December 2008 to June 2011 as the Fed pumped more than US$2 trillion into the financial system.
“You’ve got to think that the shutdown is going to be negative for the dollar and positive for gold,” said Ross Norman, chief executive officer of Sharps Pixley Ltd, a brokerage handling physical bullion in London.
“The US is trying to haul us out of a ditch, and if that main engine of growth falters, we could be back to a stormy global economy.”
The metal fell 21 per cent to US$1,318.19 an ounce in London this year. It’s trading 31 per cent below the record of US$1,921.15 set in September 2011. The Standard & Poor’s GSCI gauge of 24 commodities dropped 1.3 per cent this year and the MSCI All-Country World Index of equities gained 13 per cent. The Bloomberg US Treasury Bond Index lost 2.4 per cent.
US President Barack Obama and congressional leaders failed to break a budget impasse in negotiations since the government began the partial shutdown October 1. — Bloomberg