US stocks pushed higher on Wednesday as traders awaited the latest Federal Reserve minutes which could provide hints as to future policy amid a US government shutdown. The FTSE 100 (^FTSE) and European stocks also gained on the day, shrugging off comments from the International Monetary Fund (IMF) which warned that the US economy is slowing.
Today’s release of the minutes of the Fed’s September meeting, due at 7pm UK time, will be assessed for further clues as to the likelihood of the US central bank lowering interest rates throughout the rest of the year.
As the federal government shutdown has extended into its eighth day, there have been no releases of official economic figures, leaving investors scrambling for hints from other sources on the rate outlook.
Meanwhile, Kristalina Georgieva, head of the IMF, said it was imperative for the US to work on cutting its large federal deficit. Speaking at an event hosted by the Milken Institute, she added that countries everywhere needed both the agility of the private sector, and good government data and strong institutions to ensure a level playing field.
It came as the price of gold climbed above $4,000 an ounce for the first time. The precious metal extended its recent rally as traders remain concerned about political crises in France, Japan and the US.
Spot gold rose by 1.4% to $4,058.90 an ounce, another record high, and is up more than 50% so far this year. That follows increases of 27% last year and 13% the year before.
Gold (GC=F) is seen as a safe haven in times of turmoil, and is also used as a hedge against rising inflation.
Ewa Manthey, a commodities strategist at ING, said: “Gold has staged a historic rally, doubling in less than two years, spurred by central bank buying as it diversifies away from the US dollar, president Donald Trump’s aggressive trade policy and conflicts in the Middle East and Ukraine.
“Looking ahead, central banks are still buying – the People’s Bank of China extended its gold buying streak in September for an 11th consecutive month despite record high prices – Trump’s trade war is still pressing on, geopolitical risks remain elevated, and ETF holdings continue to expand while expectations of more Fed rate cuts intensify. All of this suggests that gold has still further room to run.”
The US remains the world’s largest holder of gold with 8,133 tonnes, now valued at $1.04 trillion (£776bn). It is the first time any nation’s reserves have surpassed the one trillion US dollar threshold.
Meanwhile, India’s physically-backed gold exchange-traded funds (ETFs) saw their largest monthly inflow in September, pushing assets under management to a record $10bn (£7.5bn).