The Japan Times - Gold hits record, dollar drops as US shutdown looms

Congressional Republican and Democratic leaders met President Donald Trump Monday in a bid to find a breakthrough before a midnight Tuesday deadline, but top Senate Democrat Chuck Schumer told reporters afterwards that "large differences" remained.

Vice President JD Vance accused the Democrats of putting "a gun to the American people's head" with their funding demands, adding that "I think we're headed to a shutdown because the Democrats won't do the right thing".

While shutdowns are not usually painful, Neil Wilson at Saxo markets remained cautious.

"Usually, markets ignore shutdowns -- most last only a few days and investors seem to take a long-term view of the situation, and the short duration of most incidents has little impact on company profits. The average length of shutdowns is eight days," he wrote.

However, Wilson warned: "It could be different this time. Deep political divisions could see this drag on. A longer shutdown could have serious consequences for stocks. In the 35-day shutdown of 2018-2019 the S&P 500 fell 14 percent."

He pointed to the White House threatening mass firings, extending a recent widespread federal cull, while recent changes to economic policy added to uncertainty and raised the prospect of a potential recession.

The prospect of a shutdown and expectations for rate cuts weighed on the dollar, as lower rates make the currency less attractive to investors.

Stock markets in Europe fluctuated in midday deals while Asia's major indexes closed mixed.

Gold, a safe haven investment in times of uncertainty, reached yet another peak above $3,871 an ounce.

Speculation is growing that it could soon hit $4,000, having piled on almost 50 percent since the turn of the year.

"In trading rooms, gold is no longer just a hedge; it's become the star performer, the undisputed heavyweight," said SPI Asset Management's Stephen Innes.

"Every desk is watching because when gold is surging, it tends to reveal more about political and policy anxiety than about jewelry demand."

There are concerns that a shutdown could delay this week's release of government statistics on the labour market.

Investors are awaiting the release this week of data on job openings, private hiring and non-farm payrolls, all of which could provide clues about the Federal Reserve's next move on interest rates.

Recent indicators have supported investor expectations that the US central bank will cut borrowing costs twice more this year, having done so this month for the first time since December.

Forecasters predict this week's figures will show the labour market continuing to slow, giving Fed officials room to loosen monetary policy.

Oil prices, meanwhile, extended Monday's three-percent plunge on fears about a glut amid talk of OPEC+ hiking output again when officials meet on Sunday.

Trump's Gaza peace plan was also "weighing on crude", said Joshua Mahony, chief market analyst at traders Scope Markets.

- Key figures at around 1045 GMT -

London - FTSE 100: FLAT at 9,302.25 points

Paris - CAC 40: DOWN 0.4 percent at 7,853.55

Frankfurt - DAX: UP 0.1 percent at 23,771.00

Tokyo - Nikkei 225: DOWN 0.3 percent at 44,932.63 (close)

Hong Kong - Hang Seng Index: UP 0.9 percent at 26,855.56 (close)

Shanghai - Composite: UP 0.5 percent at 3,882.78 (close)

New York - Dow: UP 0.2 percent at 46,316.07 (close)

Euro/dollar: UP at $1.1742 from $1.1725 on Monday

Pound/dollar: UP at $1.3439 from $1.3434

Dollar/yen: DOWN at 147.99 yen from 148.68 yen

Euro/pound: UP at 87.37 pence from 87.28 pence

Brent North Sea Crude: DOWN 0.7 percent at $67.53 per barrel

West Texas Intermediate: DOWN 0.8 percent at $62.95 per barrel

K.Inoue--JT