As the United States faces the threat of a government shutdown for the second time in two months starting from November 17, investors may be tempted to seek refuge in gold as a safe haven.

Here are the obvious arguments in favor of gold:

Firstly, if federal government employees are laid off, it will undoubtedly harm consumer spending just as the country enters the holiday shopping season. Consequently, the employment situation will worsen, leading to economic weakening. Prospects for spending should support gold prices.

Past shutdowns have also significantly damaged overall economic growth. According to estimates from the U.S. Bureau of Economic Analysis, the 16-day government shutdown in 2013, which led to the furloughing of 800,000 federal employees, reduced GDP growth by 0.3 percent in the fourth quarter.

According to calculations by S&P Global Ratings Economics in February 2018, before the impending government shutdown in the U.S., quarterly GDP growth decreased every week of government closure, ultimately reducing by 0.2 percentage points.

Again, broad economic weakness that significantly impacts economic growth should increase gold prices. However, this has not been confirmed. During the last three government shutdowns, gold prices either stagnated or sharply declined, while stocks rose.

In 2013, when the federal government shut down from October 1 to 17, gold prices initially surged but later essentially remained at the same level.

During the last government shutdown in 2018-2019, lasting 35 days and being the longest shutdown in U.S. history, gold prices only rose by $20. This is a decent one-day gain by the standards of the fall of 2023.

On the other hand, the stock market seems to enjoy these shutdowns. According to a recent analysis by Forbes Advisor, the government ceasing its non-essential functions is a pure positive for stocks. During the last government shutdown, which ended in January 2019, the S&P 500 index gained 10.3%. In 1976, the average duration of a U.S. government shutdown was only 9.5 days, and the S&P 500 index averaged a 0.3% increase.

John Lynch, chief investment officer for Comerica Wealth Management, told Forbes that investor indifference to government shutdowns goes beyond the stock market and includes bonds, the dollar, and gold.

According to Lynch, an analysis of other asset classes yielded similarly ambiguous results. Since the dynamics of the U.S. dollar, bonds, and gold did not show significant correlation with government shutdowns, market interest rates soared, likely due to concerns about the debt limit, which supported the U.S. dollar and had a slight impact on commodity prices and gold.