Silver spot price gains amid US debt limit standoff
NEW YORK (Oct 14) The silver spot price has gained more than one percent today amid growing concerns that US lawmakers would fail to meet the deadline for raising the federal debt ceiling expected to be reached this Thursday. Congress has until October 17 to extend the country’s borrowing authority and avert a potential debt default which could threaten the US economy and throw the global financial markets into disarray. And while many analysts believe that a last-minute deal will be reached, some fear that neither Republicans, nor Democrats will be willing to make concessions because this might be perceived as a sign of weakness. If this happens, a debt default might be the only way to break the political gridlock in Washington.
The silver spot price had gained about 0.7 percent to be at $21.47 an ounce as of 14:15 BST, after having risen to $21.66 earlier in the session. In other precious metals, the platinum spot price had risen 0.65 percent to be at $1,380 an ounce as of 14:18. The palladium spot price gained 0.3 percent to $714.00 an ounce.
Silver price is expected to be volatile this week due to the looming US debt default. Republicans and Democrats have yet to reach an agreement on how to resolve the US fiscal impasse. Over the weekend President Barack Obama rejected a proposal by Republicans for a short-term raising of the debt ceiling, which had been thought to offer a way out of the deadlock. Obama has warned that a short-term increase in the federal borrowing limit may eventually lead to a replay of the same brinksmanship that is being experienced right now.
In addition to the debate over the raising of the US debt ceiling investors will closely monitor developments relating to the outlook for the commodities-friendly quantitative easing programme of the Federal Reserve. They will await the outcome of the Federal Reserve FOMC meeting at the end of this month to see whether the US central bank will reduce the pace of its monthly purchases of Treasury and prime mortgage debt. The ongoing government shutdown in Washington has delayed important releases of economic data, denting traders’ ability to gauge the state of the US economy.