Mounting fears of a US government shutdown lift Gold to a new record high. The US dollar weakens as Hong Kong and China stocks end the third quarter with strong gains.
Gold extends gains as US government shutdown looms, bullish tone in HK/China equities
Key takeaways
- US shutdown risk rises: Political deadlock in Congress has heightened the odds of a US government shutdown on 1 October, weighing on sentiment.
- Gold surges to record highs: Mounting safe-haven demand lifted Gold (XAU/USD) to fresh all-time highs above US$3,870, supported by a weaker US dollar.
- China & Hong Kong equities rally: The Hang Seng Index (+11.5% Q3) and CSI 300 (+17.9% Q3) are set to end the quarter strongly, bolstered by improved PMI data.
- US dollar under pressure: The DXY extended losses below its 50-day MA, dragged by AUD strength, as the RBA held rates steady but struck a hawkish tone.
The odds of a looming US government shutdown on Wednesday, 1 October, have increased as US Vice President Vance mentioned that the last-minute talks between Senate Democratic leaders and the US White House with Senate Republican leaders have continued to face roadblocks in the passage of a short-term spending bill to keep the government open until 21 November.
Mounting concerns over a potential US government shutdown and its ripple effects on global markets lifted gold (XAU/USD) by 2% on Monday, 29 September, pushing it to a fresh all-time closing high of US$3,834
In today’s Asia session, Gold (XAU/USD) has continued to extend its gains with an intraday rally of 0.5% and hit another fresh intraday record high of US$3,872 at the time of writing, in line with a softer US dollar.
The US Dollar Index declined for the third consecutive session with an intraday loss of 0.2% as it traded below its 50-day moving average, which is acting as an intermediate resistance at 98.05.
Today’s Asia session US dollar weakness has been attributed to an outperformance of the AUD (+0.4%) against the greenback as the RBA held its policy cash rate steady at 3.6% as expected, while sounding a hawkish note on inflation, in turn reducing rate cut bets for the next meeting in November.
Hong Kong and China stock markets are poised to close September and the third quarter on a strong bullish note ahead of China’s National Day holidays, which run from 1 to 8 October. Hong Kong’s Hang Seng Index added 0.9% today, with Q3-to-date performance of 11.5%. China’s CSI 300 staged an intraday rally of 0.5% and a Q3-to-date performance of 17.9%, its best quarterly gain since Q1 2019.
The risk of an entrenched deflationary spiral in China has been reduced as the latest manufacturing PMI data for September from private surveyor RatingDog has increased to 51.2 from 50.5 in August, jumping to its highest level since May, and beating the consensus forecast of 50.3
Our YouTube video above contains more insights and the latest intraday technical analysis on our Chart of the Day, Japan 225.
