Outside the Box
U.S. budget uncertainty and Fed rate-cut hopes fuel safe-haven demand
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Gold is trading firmly above $4,000 an ounce in the aftermath of the U.S. government shutdown. Most traders see gold’s continuing strength as evidence that financial markets value safety amid volatility, political battles and a weak U.S. economic outlook.
In this scenario, the price strength of gold could be seen as a show of wisdom rather than a sign of exuberance, as market participants are hedging their investments by maintaining or adding to their positions in physical gold GC00 amid growing optimism that a functional U.S. government will bring confidence to economic indicators.
