Physically backed gold exchange traded funds weakened Monday ahead of uncertainty surrounding the government showdown.
The SPDR Gold Shares (GLD) was down 0.3% Monday. GLD has gained 11.2% over the past three months.
Gold futures were 0.7% lower Monday, trading around $1,330 per ounce, as many speculators liquidated positions ahead of the debt ceiling deadline on Capitol Hill.
“Gold is suffering along with other commodities and equities,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC, said in a separate Bloomberg article. “This is general asset liquidation, and people want to be on the sidelines because of the uncertainty.”
Gold prices have been strengthening in the third quarter, especially after the Fed unexpected maintained its accommodative stance.
In the week ended Sept. 24, hedge funds’ net-long position in bullion rose 12%, with long wagers increasing 1.8% while short bets dropped 17%, the largest dip in four weeks, reports Elizabeth Campbell for Bloomberg.
“The Fed has made it clear that the economy is weak, and the stimulus spigot will be open full-bore,” John Stephenson, a manager at First Asset Investment Management Inc., said in the article. “That means they’re continuing to inject more into the money supply, and that is a bullish argument for gold.”
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.
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