Gold Price Up As US Shutdown Raises Investor Concerns

• Spot gold price jumps
• Global investors turning to safe haven assets
• U.S. shutdown adding to the appetite for non-risky assets

Gold prices surged Friday as the prolonged U.S. government shutdown seemed to have increased investor concerns on global growth, spurring them to look at precious metals.

According to a Reuters report, spot gold jumped 0.3 percent to $1,284.31 per ounce, as of 0726 GMT (2.26 am. EST). The U.S. gold futures rose 0.3 percent to $1,283.10 per ounce.

Markets are now waiting for the outcome of the upcoming U.S.-China trade talks. The longest U.S. government shutdown has entered the 34^th day and investors are looking at safe-haven options.

Gold prices inched up to $1,282.70 an ounce in New York, up 0.09 percent.

John Sharma, an economist at the National Australia Bank, told Reuters that gold's rise was spurred by developments such as the U.S. government shutdown, trade war with China and the climate of slower rate hikes.

Any new development on the U.S.-China trade discussions would also boost gold price, he noted.

Sabrin Chowdhury, commodities analyst at Fitch Solutions, also asserted that rising global risk-aversion in 2019 will support investments in safe-haven assets like gold.

Reuters analyst Wang Tao noted that spot gold price will stay safe at $1,278 per ounce as the support level is looking comfortable. Another metal, palladium recently, jumped to a new high of $1,434.50 an ounce on low supply and rising demand.

Safe Haven Status To Thrive

An estimate by Kitco News said 2019 will be the year of asset reallocation that will support precious metals, with investments shifting to gold and silver as the uncertainties on global economic slowdown escalate.

“At the global level, we forecast GDP growth to slow from 3.6 percent to 3.0 percent this year and to a decade low of 2.8 percent in 2020,” Capital Economics wrote in their first quarter outlook.

“We remain bullish on the prospects for gold and silver prices and have revised up our end-2019 forecasts to $1,350 per ounce and $17.50, respectively, as we expect both metals to attract investors seeking safe havens," the report said.

It also said global equities will fall in 2019, limiting investors’ appetite for risk assets as the S&P 500 may fall to 2,300 by the end of this year. This will further support gold price in the months to come.