Gold rebounded after reaching an eight-week low in New York as investors weighed a U.S. government shutdown and the outlook for U.S. stimulus.
U.S. lawmakers still need to agree on raising the debt limit to avoid a default after Oct. 17, following the government’s first partial shutdown in 17 years. The shutdown began after House and Senate lawmakers failed to agree on a spending plan for the fiscal year that started yesterday.
Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value. Holdings in gold-backed exchange-traded products slid 27 percent this year on speculation the Federal Reserve will slow debt purchases. While the Fed said last month it will delay reducing stimulus, economists surveyed by Bloomberg Sept. 18-19 expect the first step in cutting bond buying in December.
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