Gov't shutdown would spur quick gold rally: Trader

The chances of a partial government shutdown in the week ahead appear to have fallen substantially with the announced resignation of House Speaker John Boehner. But if a deal does not get done, look for a speedy rally in gold, says trader Phillip Streible.

"If we do have a shutdown … the gold bugs are going to come out to work here," the senior market strategist at RJO Futures said Friday on CNBC's "Trading Nation."

Streible reasons that some will think a partial shutdown is a sign to get into safe-haven assets, a group that gold arguably belongs to.

After all, when a shutdown occurs, "people go without paychecks, uncertainty is risen, and everybody gets a little less confident in the federal government—no matter how unconfident they may have started out," Max Wolff of Manhattan Venture Partners said Friday.

Read MoreShort-term yields spike on Boehner resignation news

With gold currently near $1,135 per troy ounce, the commodity will be worth a look once it breaks back above resistance at $1,151, Streible said. Once that happens, "we'll probably push on up to about the 200-day moving average at $1,174."

Yet he doesn't expect the rally in gold to last long.

"Right around then, coming into the end of the week, we probably see the resolution being done, and gold will probably come off from that," he said.

To avert a shutdown, Congress needs to act before Wednesday to pass a continuing resolution that funds the government at least for a short while. Boehner's announced resignation appears to open him up to doing a deal with Democrats that will allow such a resolution to be passed.

But if that doesn't happen, will anything other than gold get a boost?

"It might be good for the news business," Wolff quipped.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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