The precious metal surged to beyond $1320 on Wednesday, as traders bought into the market with the commodity at an eight-month low. Those gains have been pared back today though, as profit-taking set in.
Gold has fallen over 20% this year – which means it is in a bear market – and the metal is set to close down on the year for the first time in 12 years. While there have been some rallies over the past nine months, the chart indicates we are in a downward trend and gold could go below the $1300 level again.
The current US budget deadlock between the Democrats and Republicans could be an indication of the likely problems with the looming debt ceiling talks. The US government must come to a decision over the level of US debt before 17 October, and if no decision is reached the US risks being downgraded, which could drive the price of gold higher.