Morning Market Update Oct 17: Gold Soars On Washington "Deal That Isn't" - Gainesville Coins News
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Morning Market Update Oct 17: Gold Soars On Washington "Deal That Isn't"

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Morning Market Update Oct 17: Gold Soars On Washington "Deal That Isn't"

Charting-Gold-Market

Gold is up $35 an ounce in New York this morning, as traders and investors realize that the "last minute deal" in Washington to avert a default on America's sovereign debt wasn't really a deal at all. The only thing Wednesday night's agreement did, was provide a 90-day break between rounds in the fight over spending, entitlements, and taxes. We're going to be right back here in February, folks.

The estimated $24 billion in damage done to the economy by politicians in Washington over the last two weeks has all but assured that the Federal Reserve will not reduce its massive quantitative easing measures any time soon. As this fact dawned on the markets, the dollar index was pummeled to multi-month lows and stock indexes in Europe, China and the U.S. fell.

Precious metals are seeing strong short covering, bargain hunting, and support from fears of further devaluation of the dollar.  The domestic Chinese rating agency Dagong, which has had the U.S. at a lower credit rating than Western credit agencies, lowered its rating for the U.S. to A-, citing Washington's inability to commit to a rational financial policy. While Dagong's ratings are not followed much outside of Asia, the announcement was seen as a clear message from Beijing to Washington that it was reconsidering its position as the largest buyer of U.S. debt.

The platinum group metals are seeing support from continuing labor unrest in South Africa, where the leading mineworkers union has rejected the offer of Amplats and Implats. A strike against these two companies would mean a disruption in 50% of the world's platinum production.

 

by David Peterson

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