GoldPrice.

The gold market is slightly higher in early action today as stocks soar. News of a possible deal to avoid another government shutdown later this week has fueled a stronger appetite for risk and buying in equities.

A Possible Deal

According to thestreet.com, Alabama Senator Richard Shelby said a tentative deal had been reached with democrats to fund the government through the end of the fiscal year in September. The deal reportedly does not, however, provide for the $5.7 billion in border wall funding that has been demanded by President Trump.

Lawmakers have reached an “agreement in principle” to avoid another government shutdown set to go into effect later this week, according to the Washington Post. The agreement reportedly came together following hours of closed-session negotiations after talks had fallen apart over the weekend. Democrats had been looking to limit immigrant detention, and the issue proved to be a major sticking point until democrats finally dropped some of their demands.

Obstacles remain, however, and it is unclear of President Trump will go along with the tentative deal reached. According to thehill.com, White House Deputy Press Secretary Hogan Gidley stated “We’re not sure yet, to be quite honest.” He went on to add that it’s “very difficult to comment” as the details had not yet been examined. He went on to state “I’m not ready to focus on what could be in there. I would like to focus on what is actually in there. We haven’t seen that yet. We’ve heard some rumors and we’ve heard some reports. We’ve seen some reporting on exactly what could or could not be in there.”

There are several key issues that remain an area of focus for a deal to be reached, and it is yet unclear if the government will actually avoid another shutdown.

Stocks Higher

Stock investors cheered on the news of a potential deal and came out of the gate as strong buyers in early action today. The benchmark Dow Jones Industrial Average was up over 300 points in early action for a rise of about 1.25%. The benchmark S&P 500 was also higher by over 31 points for a gain of 1.17% while the tech-heavy Nasdaq rose by nearly 100 points for a gain of 1.36%.

Market Reaction

Spot gold prices are up $3.41/oz at $1,310.42 in recent trade. After prices dipped in earlier trade, buyers have again stepped in to buy, taking prices several dollars per-ounce off the lows. The market has been trading in a tight range in recent sessions, and the longer it moves sideways the greater the potential for a sizable move. The possibility of a deal to avoid another government shutdown is likely weighing on the metal today, although some anxiety remains. Markets will not breath a significant sigh of relief until President Trump signs off on the deal.

Markets will also focus on the continuing trade negotiations taking place in Beijing this week. There has been little news thus far, but hopes are that some progress may be made. If the talks prove to be fruitless, a stronger degree of risk aversion may again enter the marketplace and potentially fuel additional buying interest in gold and other perceived safe haven asset classes.