Geoff Dennis, Independent EM Commentator told ET Now, “It depends on how long the shutdown lasts. Typically, short shutdowns don’t have a dramatic economic impact. The bigger driver now is the lower dollar, which should help emerging markets perform well.”
On a prolonged shutdown like in 2018-19, Dennis said, “The main risk is if Trump goes ahead with his threat to furlough up to 750,000 public sector employees. That could put downward pressure on the economy and may lead the Fed to cut rates more than once before 2026, keeping the dollar weak.”
Gold, meanwhile, continues to attract investors amid uncertainty. Dennis explained, “The dollar isn’t seen as a safe haven, inflation concerns persist, and global tariffs add to uncertainty. This keeps demand for gold strong, and if the dollar weakens, gold prices are likely to rise further. Growth will be slow and erratic, but the trend is still upwards.”
With the US dollar expected to stay soft and emerging markets positioned for potential gains, investors are turning to safe-haven assets like gold to navigate the uncertain environment.
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