Gold has posted strong gains in the Wednesday session. In North American trade, the spot price for an ounce of gold is $13523.90, up 0.94% on the day. On the release front, Existing Home Sales disappointed, slowing to 5.57 million. This missed the forecast of 5.72 million. On Thursday, the US releases unemployment claims and New Home Sales.
The broad selloff of the US dollar continues, as major rivals such as the euro, pound and yen have posted strong gains on Wednesday. Gold has also jumped on the bandwagon, and has climbed 3.7% in the month of January. Gold has benefited from weaker appetite for risk, as global equity markets are lower. We could see more movement from gold later during the week, with the release on Friday of Advance GDP for the fourth quarter of 2016, as well as durable goods reports.
The US government shutdown lasted just three days, and only affected one working day. Still, the positive news didn’t boost the struggling US dollar. The funding agreement that Congress approved is little more than a band-aid solution, as it extends funding only until February 8. The Democrats held up a funding bill last week, in order to force the Republicans to the table over illegal immigration. The Republicans have promised to hold a vote on this issue, but many Democratic lawmakers remain skeptical that President Trump and the Republicans will deal in good faith over immigration. If the bipartisan efforts to reform immigration implodes, the government will again find itself without funds come next month. With many members of Congress up for re-election in November, lawmakers will be trying to avoid angering voters with a second shutdown next month.
