US Shutdown Threat: Gold Strengthens, Oil Under Pressure, Silver Boosts
The political deadlock in the United States, which could potentially trigger a government shutdown, has not only shaken domestic politics but also significantly impacted global commodity markets, including gold, oil, and silver.
A shutdown occurs when Congress and the President fail to agree on a budget or temporary funding resolution. This situation results in the suspension of most federal government services, the suspension of thousands of employees without pay, and the delay of several official economic reports. The longest shutdown in history occurred in 2018–2019, lasting 35 days, depressing US economic growth by almost 0.2% each week.
Gold Strengthens as a Safe Haven
The fiscal and political uncertainty caused by shutdowns typically drives a surge in demand for safe assets. Global investors turn to gold, causing the price of the precious metal to strengthen. The weakening US dollar, which often follows fiscal turmoil, also acts as an additional catalyst for gold. During the 2013 and 2018–2019 shutdowns, gold prices rose 2–3% in the first weeks.
Oil Pressured by Weak Demand
Unlike gold, crude oil prices are vulnerable to pressure. The shutdown has the potential to slow US economic activity and domestic energy consumption, putting pressure on the oil demand outlook. Furthermore, the delayed release of weekly inventory data from the Energy Information Administration (EIA) adds to uncertainty in the energy market. However, analysts believe oil prices remain more influenced by geopolitical factors and OPEC policies than the shutdown itself.
Silver Boosts, But Limited
Silver, which has dual properties as an investment and industrial metal, typically enjoys safe-haven sentiment during times of uncertainty. However, the weakening outlook for industrial demand due to the economic slowdown could limit its gains. In other words, silver has the potential to rise alongside gold, but with less room for further gains.
Summary of the Shutdown's Impact on Commodities
Gold: Tends to strengthen due to demand for safe-haven assets and a weakening dollar.
Silver: Also rising, driven by safe-haven sentiment, but limited by industrial risks.
Oil: Vulnerable to pressure due to the economic slowdown and uncertain energy data.
With the deadline looming and no agreement in Washington, global markets are now waiting to see whether the US government will actually face a shutdown. If so, commodity price volatility could potentially spike sharply in a short time.
Source: Newsmaker.id
