Gold Closes Below 2000 Level As Us Debt Crisis Looms

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Gold Closes Below 2000 Level As Us Debt Crisis Looms

Gold Closes Below $2000 Level As US Debt Crisis Looms

It appears that the US debt crisis isn't just affecting the riskier assets alone... In fact, even the yellow metal (Gold) is feeling the heat as the US heads close to a full-blown debt crisis if the debt ceiling is not raised.

Gold is considered to be a hedge against any economic trouble, but it appears even that is changing in recent times. For the first time in last the 2 weeks, Gold has slipped below the $2,000 level, which is a sign of weakness. Earlier, the Gold was rallying as the investors flocked to safety.

If we look at Gold's June delivery contract, it settled near $1993 after closing the day with a 1.5% decline. However, the gold made a low of $1989.25; it eventually settled at $1993. On the 4th of May, Gold managed to hit the $2085 level, which was an-times high if we look at its recent history.

Spot Gold Touched $1987.62 Level

If we look at the spot gold prices, it is also down and was last seen trading near $1987.62. Overall, the spot gold prices are down by 1.4% or around $28.84.

The decline in the gold spot and futures came at a time when the US Dollar index gained strength after closing above the 102 level. Similarly, the yield of the 10-year US bonds also reached 3.572% on account of uncertainty.

All of this is happening due to the debt-ceiling standoff in Washington, which has yet to reach its final conclusion. There are some rumors that the parties will agree on a bipartisan deal to raise the debt ceiling.

According to one analyst at OANDA, the gold is lower because the market is awaiting for some meaningful update regarding the debt ceiling issue. In fact, the analysts said that the gold prices declined because the investors were preparing for something bad to happen.

But despite all these theories, no one really knows the real catalyst behind the decline in gold prices. After all, gold is always considered to be a hedge against risk. And based on this theory, gold should be trading higher instead of turning lower!

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