IE:Gold bides time as US government nears shutdown
Gold price was steady on Tuesday, after posting its best quarter in a year, as the US government stood on the brink of shutdown over Congress' failure to agree on a spending bill and the dollar weakened.
The US government was on the edge of a major shutdown because of partisan deadlock in Congress over Republican efforts to halt President Barack Obama's healthcare reforms by using a temporary spending bill.
Gold had gained early on Monday on safe-haven bids surrounding the shutdown, but retreated as such bids slowed despite a weaker dollar. Spot gold was up 0.1 percent at $1,328.24 an ounce by 0313 GMT on Tuesday.
"The looming US government shutdown is providing little safe-haven bid into gold, but we expect that should the political wrangling continue over the debt-ceiling negotiations mid-month, this could provide the impetus for gold to break out of its $1,300 to 1,350 range," said Victor Thianpiriya, an analyst at ANZ in Singapore.
"The market is not putting on a big net position which makes me think that when we get a breakout, it is likely to be sizeable."
A Sydney-based trader said gold was not seeing much safe-haven buying as the issue was likely to be resolved soon and there was not much upside to gold beyond that.
The last time the US government shut down in 1995-96, gold - which was then trading at less than $400 an ounce -- gained about 3 percent.
The budget standoff does not bode well for the next political battle, a far more consequential bill to raise the federal government's borrowing authority.
Failure to raise the $16.7 trillion debt ceiling by mid-October would force the United States to default on some payments - an event that could cripple its economy and send shockwaves round the globe. When the debt ceiling issue came up in 2011, an agreement was reached only in the last minute and gold hit an all-time high of $1,920 an ounce, in part because of the uncertainties surrounding a deal.
Demand for US gold coins fell 81 percent in September on an annual basis, as political turmoil in Syria failed to rekindle retail buying that has slowed after months of exceptional bargain hunting, data on the US Mint website showed on Monday.
