By Dow Jones Business News, October 11, 2013, 10:33:00 AM EDT
By Matt Day
NEW YORK--Gold futures careened to the lowest price in three months Friday as the potential for an end to the
political gridlock in Washington curbed demand for the perceived safe-haven asset.
The most actively traded contract, for December delivery, recently traded down 2.3%, or $30.10, at $1,266.80 a troy
ounce on the Comex division of the New York Mercantile Exchange. Futures fell as low as $1,259.60 a troy ounce, the
lowest intraday price since July 10.
House Republicans met with President Barack Obama on Thursday to offer a six-week extension of the nation's debt
ceiling in exchange for budget-cut talks. The meeting ended without a deal, but was widely seen as a political thaw
after weeks of stalemate in Washington.
Parts of the federal government have been shut down since last week, and the U.S. borrowing limit is expected to
arrive next week, risking a default if a deal to raise the limit is not reached.
Some investors buy gold as a hedge against political or economic turmoil, and relative calm in financial markets even
as the U.S. government shutdown has gold futures poised for a fourth consecutive loss.
"It's going to be negative for gold if you see the debt ceiling resolved and the government reopened," said Thomas
Capalbo, a precious metals broker with Newedge.
Exchange operator CME Group Inc. ( CME ) briefly halted gold trading as prices slumped in heavy volume on Friday
morning, a spokesman said.
Stop Logic, a type of circuit breaker that pauses trading for between five and 20 seconds in an attempt to prevent
excessive volatility, was triggered in the December-delivery gold futures contract at 8:42 a.m. EDT and lasted for 10
seconds, the spokesman said. Futures fell by $14.50 an ounce in that minute.
Bigger picture, "there's a huge disappointment with gold's inability to rally or sustain a rally off the backdrop of
the debt ceiling" debacle, said Graham Leighton, director of precious metals trading with brokerage Marex Spectron.
Gold is down 23% this year largely as investors anticipate an end to the Federal Reserve's stimulus, as well as rising
higher interest rates. Rising rates make zero-yielding assets like gold less appealing, analysts say.
Under that pressure, gold's moments of strength this year on the U.S. debt ceiling, slowing growth, and escalating
crisis in Syria, have proved fleeting.
--Tatyana Shumsky contributed to this article.
Write to Matt Day at email@example.com
(END) Dow Jones Newswires
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