US Government reopens: Will Gold prices rise or fall?

The US government shutdown, which lasted for several weeks or 43 days has ended. It was the longest shutdown in history lasted for 43 days. Now, the US economy is coming back on track, the investors are speculating about the future of the gold prices as there has been lack of key economic data and heightened uncertainty in global markets.

Impact of the Shutdown Ending

With Congress passing a reopening bill, federal operations including payroll for hundreds of thousands of employees working day and night without pay, food assistance programs, and air-traffic control have resumed. Investors in the country are now weighing whether the resolution of the shutdown could reduce safe-haven demand and trigger a decline in bullion prices This reopening of economy is expected to provide a clear picture on the trend of inflation, employment and consumer spending.

Following the announcement of the US government reopening, gold prices which are already very high experienced short-term volatility. International spot gold hovered around $4,100 per ounce, while silver traded near $53.50 per ounce. The market’s initial response reflected a boost in risk appetite, that may temporarily shift investors away from gold into equities or bonds as immediate political risks subside. The US dollar is also likely to strengthen after the reopening which may make gold less attractive as an investment for international investors. The post-shutdown data on the US economy will influence the Federal Reserve’s rate decisions. If the economy looks stronger, the US may not cut rates which can push gold prices down.

Despite potential short-term declines in prices, structural demand factors will continue to support gold prices. Gold remains a preferred hedge against inflation and currency fluctuations as many countries want to make their currency stronger than the United Stated dollar. Central banks in countries including India, China, and Russia have consistently added to their gold reserves to give domestic economic infrastructure a long term support. Additionally, global uncertainties such as geopolitical tensions and rising debt levels has also increased the demand for precious metals.

Silver Price Outlook

Silver, which is correlated with gold, may have similar short-term ups and downs. However, industrial demand for silver is higher than for gold, as its use in renewable energy, electronics, and manufacturing provides additional support, its strong demand helping prevent sharp price declines

Price Outlook

In the short term, gold may trade between $4,000–$4,050 per ounce while silver could range between $52–$54 per ounce. Over the long term, central bank accumulation of gold and silver, industrial demand, and inflation hedging are likely to maintain a stable upward path.

The end of the US government shutdown may create short-term volatility and minor price corrections for gold and silver but overall key factors are likely to push both metals price higher. Temporary adjustments are possible but precious metals will continue to serve as a reliable hedge in uncertain times.