Gold strengthened as traders weighed the imminent end of the U.S. government shutdown and the outlook for the Fed's interest rate direction.
U.S. House members returned to Washington on Wednesday to vote on ending the 43-day government shutdown. The legislation, a compromise forged in the Senate and approved by President Donald Trump, would reopen the federal government and fund some agencies, but does not include an extension of the enhanced Obamacare premium tax credit.
Treasury yields eased slightly and the U.S. dollar pared its gains. This helped lift bullion by up to 1.5%, as lower interest rates typically benefit non-yielding bullion.
"All hard assets" such as gold, silver, and copper are strengthening, said Ole Hansen, commodity strategist at Saxo Bank A/S. "I believe this is a search for protection against something going wrong on the fiscal side."
The reopening of the U.S. government will likely lead to the resumption of economic data releases, which could shed light on the Fed's next interest rate move. The latest private employment data showed weakness in the US labor market, raising the possibility of further interest rate cuts by the US central bank.
Gold recently retreated from last month's record high above $4,380, but is still up more than 55% this year. Gold remains on track for its best annual performance since 1979, supported by a number of factors, including increased central bank buying.
Gold rose 1.4% to $4,183.60 an ounce at 11:23 a.m. in New York. The Bloomberg Dollar Spot Index was little changed. Silver jumped 3.6%, while palladium and platinum rose nearly 2%. (alg)
Source: Bloomberg
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