WASHINGTON (dpa-AFX) - Gold prices surged to a new record high on Wednesday after the U.S. government shutdown commenced at midnight, forcing agencies to suspend all but essential operations.
Spot gold jumped 0.7 percent to $3,886.26 per ounce in European trade, while U.S. gold futures were up a little over 1 percent at 3,913.
After Congress failed to pass a budget in time to fund several federal agencies, leaders of both the Republican and Democratic parties have insisted that they are not to blame for the halt in funding.
The first government shutdown since 2019 would delay the release of key economic reports - including jobs and inflation data - used to gauge the direction of the economy and the Federal Reserve's interest rate decisions.
Investors are already wary about a slowing labor market, the risk of stagflation and elevated stock valuations, and it is feared that the shutdown could prompt rating agencies to rethink the strength of U.S. credit rating, which was downgraded in May by Moody's.
The latest deadlock over spending may paralyze many government operations, causing the suspension of services for Americans and pay-checks for federal workers.
Economists have warned that negative effects will increase significantly if the gridlock continues for more than two weeks.
The U.S. dollar wobbled, hovering near a one-week low versus major peers, following weak consumer confidence data released overnight.
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