Asset Watch
Wednesday, May 10, 2023
The last debt ceiling debacle occurred in 2011. The gold line below tracks the gold futures price from June through September 2011, while the black line below tracks the inverted (up means down) S&P 500.
As the negotiations grew more precarious, the gold futures price soared by more than 25% in less than two months, while the S&P 500 declined by nearly 20%. If a similar stalemate occurs this time, the yellow metal should be traders’ safe-haven asset of choice. Though the U.S. dollar often benefits from panic, the greenback tumbled alongside the S&P 500 before recovering in September 2011.
So, will this iteration live up to the hype, or have lawmakers learned their lesson from 2011?