Gold Price Hits Six-Month High as U.S. Government Shutdown Enters Sixth Day

The price of gold notched six-month highs Thursday, as a combination of political uncertainty and plunging share prices drove investors into the safety of precious metals.

Rally Continues

Gold for February settlement reached a session high of $1,279.60 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract last traded at $1,277.20, having gained $4.20, or 0.3%, from the previous close. That’s the highest level since mid-June.

Bullion remains a ways off from its 52-week high of $1,398.20. The yellow metal has added nearly 5% over the past month, signaling a major reversal in market sentiment.

Silver prices also advanced sharply Thursday, reaching their highest level since August. The March contract climbed 15 cents, or 1%, to $15.27 a troy ounce.

The gold-silver ratio that is used by investors to time their entry into precious metals declined sharply this week, a reflection of the grey metal’s rapid advance. The ratio was valued at 84.59 on Boxing Day, down sharply from 86.2 during the previous session. This basically means that 84.59 ounces of silver are needed to purchase one ounce of gold.

A weaker dollar on Thursday helped precious metals maintain their upward trajectory. The U.S. dollar index, which often trades inversely with metals, fell 0.4% to 96.67.

Stock prices also fell sharply following a dramatic post-Christmas rally. The major indexes were down between 1.2% and 2% as of 11:45 a.m. ET.

Government Shutdown Enters Sixth Day

Senate lawmakers are scheduled to meet Thursday afternoon to resolve a budget impasse that has put nine federal agencies on hold since Saturday. The partial government shutdown was triggered by Democrats’ refusal to approve a new budget blueprint that includes funding for President Trump’s proposed border wall.

The president, who recently visited Iraq, took to Twitter on Thursday to pressure Democrats into reversing their decision.

“Have the Democrats finally realized that we desperately need Border Security and a Wall on the Southern Border. Need to stop Drugs, Human Trafficking, Gang Members & Criminals from coming into our Country,” Trump tweeted Thursday morning.

While government shutdowns are nothing new for the Trump administration, the current impasse could extend for longer. As The Wall Street Journal notes, there has been little negotiating since Saturday. At this rate, the shutdown could extend well into 2019 when Democrats take control of the House of Representatives.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi