Gold surged to new highs for the year, buoyed by a weak dollar and persistent political and geopolitical uncertainty. The definitive push above $1300 also spurred technical buying, as focus shifted to last year’s high at 1375.15.
The federal response to Hurricane Harvey adds another level of complexity and uncertainty to the impending budget and debt ceiling debates. Some are now saying that a government shutdown is more likely than not. If that is the case, a default becomes a very real possibility as well.
Many government officials, including the President, have vowed that the debt ceiling will be raised. However, it is hard to imagine that negotiation are going to be any less than extremely contentious.
When it comes to the budget, Democrats are likely to demand that not a dime gets appropriated for a border wall, forcing Republicans to choose between President Trump’s signature campaign promise and a shutdown. “If we have to close down our government, we’re building that wall,” pledged the President last week.
There is speculation that the GOP will make another swing at repealing and replacing Obamacare. That would further muddy the waters on the imperatives of the debt ceiling and the budget.
Congress returns from the long August recess on Tuesday, September 5. At that point, things will start getting really interesting. Is your portfolio sufficiently hedged?