Gold Prices May Fall if US Government Avoids Another Shutdown

February 12, 2019

Washington (Feb 12)  An upshift in the priced-in 2019 monetary policy outlook implied in Fed Funds futures sent Treasury bond yields higher alongside the US Dollar, sapping the appeal of anti-fiat and non-interest-bearing assets. Gold prices dutifully fell. 

Interestingly, stocks rose with rates and the Greenback, implying an earnest improvement in market-wide risk appetite. Optimism emanated from European bourses. Italian banks reassured investors of their ample capital buffers and comments from the Bank of France struck a refreshingly optimistic tone. 

Crude oil prices struggled to find lasting direction, ultimately ending the day little-changed. Downward pressure on USD-denominated instruments seemed to be offset by sentiment-driven support for the cycle-sensitive WTI benchmark. 


Looking ahead, hopeful headlines hinting the US officials may have struck a deal to avoid another government shutdown may translate into another risk-on session. Indeed, bellwether European and US stock index futures are pointing convincingly higher in late Asia Pacific trade. 

If the hopeful tone is sustained as the day progresses, gold might fall further as yields and the Dollar extend upward. The upbeat mood might be challenged by soundbites from a Eurogroup meeting however if policymakers worry aloud about slowing regional growth.

Crude oil may struggle even if sentiment holds up as monthly reports from OPEC and the EIA point to renewed oversupply concerns. API inventory flow data is also due. The outcome will be weighed against forecasts calling for a 1.87-million-barrel build to be reported in official DOE data on Wednesday.

Learn what other traders’ gold buy/sell decisions say about the price trend!


Gold prices remain stuck above a dense layer of support running through 1294.10. A daily close below that targets 1276.50 next. Alternatively, a move back above chart inflection point resistance at 1323.60 opens the door for a move higher toward key resistance in the 1357.50-66.06 area.


Silver Phoenix Twitter                 Silver Phoenix on Facebook