Gold slumps as US government shuts down

Chicago, Oct 2: Gold futures on the COMEX division of the New York Mercantile Exchange reported the biggest decline since June 26 and closed at a nearly a two-month low as the US government shut down.

The most active gold contract for December delivery dropped $40.9, or 3.08 percent, to settle at $1,286.1 per ounce, Xinhua reported.

It is widely believed that the US government shutdown would be short-lived, with only minimal impact on the broader economy and would not change the Federal Reserve's time-table on retreating from its quantitative easing monetary policy.

However, if the impasse persists within the next 17 days, it could produce a negative impact on the dollar and may lead to a downgrade in the US sovereign credit rating, eroding the world's confidence in the US economy and pushing up gold prices, market analysts said.

Silver for December delivery lost 53.3 cents or 2.46 percent to settle at $21.175 per ounce. Platinum for January delivery shed $27.1 or 1.92 percent to $1,385.3 per ounce.

IANS