The US debt ceiling farce continues. Economists at Commerzbank analyze the implications for Gold price.
Gold to decline if the US debt ceiling conflict were to be resolved
“In view of the ongoing dispute over the US debt ceiling, the Gold price will probably hold its own above the $2,000 mark for the time being, living up to its reputation as a safe haven.”
“Any debt default by Washington, even if only temporary, would doubtless have serious negative repercussions for the US economy, which makes it more likely that monetary policy will be loosened – to a greater extent than is already priced in on the market – and make Gold more attractive in relative terms as a non-interest-bearing investment.”
“According to Treasury Secretary Janet Yellen, the deadline is 1 June. If the parties fail to reach agreement by then, the treasury risks running out of money on that day. Equally, the precious metal can be expected to decline if the conflict were to be resolved.”
