Sunday, October 6, 2013

Government shut down deflationary impact

The government shutdown is being viewed by some as a deflationary force in the world's largest economy. This is negative for gold as it is often purchased as a hedge against inflation.

"The economy seems weaker. With the closing of the government, and problems going on in Washington, that's a deflationary impact, and that weighs upon the gold market. If you could get strength in the economy you might actually get a bid to the gold market. Factors that could spark a fresh rally in gold include renewed tensions in the Middle East or the Federal Reserve becoming more accommodative than it has been."