Best of the Week
Most Popular
1.U.S. Housing Bull Market Over? House Prices Trend Forecast Current State - Nadeem_Walayat
2.The Coming U.S. Economic Collapse Will Trigger a Revolution - Harry_Dent
3. Stock Market Crash a Historical Pattern? - Wim_Grommen
4.Global Panic - U.S. Federal Government Stockpiling Ammo – Here’s What We’re Going to Do - Shah Gilani
5.AI, Robotics, and the Future of Jobs - Aaron Smith
6.This is Your Economic Recovery With and Without Drugs - James_Quinn
7.Gold and Silver Price Getting Set To Explode Higher - Austin_Galt
8.The Something for Nothing Society - Lifecycle of Bureaucracy - Ty_Andros
9.Another Interesting Stock Market Juncture - Tony_Caldaro
10.Inflation vs the Deflationary Straw Man - Gary_Tanashian
Last 5 days
How The Coming Silver Price Bubble Will Develop - 26th Aug 14
A Nation of Shopkeepers - Supply-Side (Voodoo) Economics? - 26th Aug 14
Stock Market Bear Tracks Abound In Wall Street - 26th Aug 14
65,000 U.S. Marines Hold up a Mirror to the Economy - 26th Aug 14
Bitcoin Market Provides Clues for Investors - 26th Aug 14
The Key to Trading Success - 26th Aug 14
Will The US Succeed in Breaking Russia to Maintain Dollar Hegemony?... - 26th Aug 14
Even Mainstream Academia Worried about Massive Bubbles in Markets - 26th Aug 14
Iraq and Syria Follow Lebanon's Precedent - 26th Aug 14
Colonization by Bankruptcy: The High-stakes Chess Match for Argentina - 26th Aug 14
Dow Stock Index On The Cusp - 26th Aug 14
Prohibition Laws and Agency Regulations - 26th Aug 14
Will Canadian Regulators be Able to Avoid Final Fatal TSX Venture Exchange (TSX-V) Crash? - 25th Aug 14
HUI Gold Mining Stocks Elliott Wave Projection - 25th Aug 14
Stock Market Uncertainty Resolved With New High - 25th Aug 14
Go Forth Multiply And Replenish The Earth - 25th Aug 14
Dollar Dumping: When Actions Speak Loudest - 25th Aug 14
A Plethora of Currency, Stocks and Precious Metals Chartology - 25th Aug 14
Why Isn’t Fed Monetary Pumping Helping the U.S. Economy? - 25th Aug 14
Myths About Money and Inflation - 25th Aug 14
The Fed Will Raise U.S. Interest Rates in March 2015 - 25th Aug 14
Gold Price Manipulation Still Alive - 25th Aug 14
The Ebola Outbreak: U.S. Sponsored Bioterror? - 24th Aug 14
Instigating War in Europe - Understanding Ukraine in 15 Minutes - 24th Aug 14
LNG Catalysts About to Hand You the investment Opportunity of the Decade - 24th Aug 14
Another Interesting Stock Market Juncture - 24th Aug 14
The West Set Up the ISIS Endgame - 24th Aug 14
Gold And Silver Low Prices Are NOT The Reason To Own Precious Metals - 24th Aug 14
U.S. Housing Bull Market Over? House Prices Trend Forecast Current State - 23rd Aug 14
Inflation vs the Deflationary Straw Man - 23rd Aug 14
U.S. Interest Rate Rise to Occur Mid-2015 According to Fed's Williams - 23rd Aug 14
Bitcoin Price Continuation of a Move up - 23rd Aug 14
Gold and Crude Oil Price on the Verge of Something Big - Hero's Rarely Win - 23rd Aug 14
Oxaloacetate Feeds and GROWS Brain Cells - Alzheimers Cure? - 23rd Aug 14
Gold Rising Interest Rate Fallacy - 22nd Aug 14
Jackson Hole: Myth of the All Powerful Central Banker Continues - 22nd Aug 14
Partying On In The Terror State - Thank God for Nuclear Weapons - 22nd Aug 14
The Something for Nothing Society - Lifecycle of Bureaucracy - 22nd Aug 14
Hitting The ISIS Panic Button In The Middle East - 22nd Aug 14
US Stock Indices 10-Year Consolidation Patterns ... Upside Breakouts? - 22nd Aug 14
Gold and Silver Price Getting Set To Explode Higher - 22nd Aug 14
Deflation's Final Curtain Call - Part II - 22nd Aug 14 - Clif_Droke
Gold Big Picture: Most Important - 22nd Aug 14
How the “Uncertainty Factor” Drives Crude Oil Prices - 22nd Aug 14
Inflation, Interest Rates, and Why You Should Own Gold - 22nd Aug 14
U.S. Interest Rates Can Rise States Fed President - 22nd Aug 14
Why Emotional Discipline is Key to Trading Success - 21st Aug 14
Getting the Most Value from Your “Geriatric Cruiser” - 21st Aug 14
Mafia Boss Claims Stocks A Bubble, Buy Physical Gold and Silver - 21st Aug 14
Outrage! On The Beheading of Our Media Brother James Foley - 21st Aug 14
Stock Market Crash a Historical Pattern? - 21st Aug 14
The Black Box Economy - 21st Aug 14
The Bond Market is taking Advantage of Janet Yellen`s Dovishness - 21st Aug 14
Meet Your Investment Manager - 21st Aug 14
Gold and Silver Trading Alert as U.S. Dollar Soars to New Highs - 21st Aug 14
President Obama Strongest Statement Yet on Israel Gaza War - 20th Aug 14
Peak Gold? Russia To Surpass Australia As World No 2 Gold Producer - 20th Aug 14
AI, Robotics, and the Future of Jobs - 20th Aug 14
Stock Market Investors What's Your Exit? - 20th Aug 14
The Gold War - Thinker, Trader, Holder, Why? - 20th Aug 14
Ukraine Interest Rates Soars to 17.5% As External Debt Cannot be Repaid - 20th Aug 14
Rising Interest Rates and The End of Stimuland - 20th Aug 14
Inflation Watch: $245,000 to Raise a Child in United States - 20th Aug 14
Inside the Stunning Deal That Put Apple and IBM on the Same Side - 20th Aug 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

Gold and Silver Gain Along with Stocks on Fiscal Cliff Deal

Commodities / Gold and Silver 2013 Jan 02, 2013 - 06:25 AM GMT

By: Ben_Traynor

Commodities

SPOT MARKET gold prices started the year by touching a two-week high above $1680 per ounce Wednesday morning, as European stock markets also gained following news of a deal in Washington to avoid the so-called fiscal cliff.

Gold in Euros and Sterling by contrast were little changed on the day by late morning in London, recovering losses following a slight dip during Asian trading.


Silver meantime rose to $30.89 an ounce – also a two week high – as other commodities also gained.

On the currency markets, the Dollar fell sharply against the Euro as Asia opened, before recovering some ground later in the day.

The EuroStoxx 50 index, which tracks blue-chip Eurozone stocks, rose to its highest level since August 2011, while prices for US Treasury bonds fell after Congress passed a deal to avoid tax rises and spending cuts that were scheduled to start today.

The House of Representatives passed a bill, agreed a day earlier in the Senate, that will extend tax cuts for all Americans except those in the top 1% of earners – defined as individuals earning more than $400,000 a year and families earning more than $450,000.

"Today's agreement enshrines a principle into law that the deficit must be reduced in a way that is balanced," US president Barack Obama said Tuesday.

"Everyone pays their fair share. Everyone does their part."

The deal is expected to generate $620 billion in tax revenues over ten years, while the value of spending cuts in the deal over that period is $12 billion. The so-called sequester of cuts to military spending and programs such as Medicare was postponed for two months. The sequester, which was due to come into effect today, was agreed in 2011 when Congress last raised the debt ceiling limit on federal borrowing.

"The fiscal cliff was in many ways a self-made deadline to make [politicians] face the hard choices," says Maya MacGuineas, president of campaign group the Committee for a Responsible Federal Budget.

"They once again managed to duck all of them."

"The process was so chaotic and the outcome so unsatisfactory," says a note from Citi fixed-income strategist Steven Englander, "that we are likely to see a further US downgrade at some point."

"The colossal failure of political will to get America's fiscal house in order should provide fodder for the gold bugs to bid prices higher," adds Edward Meir, metals analyst at brokerage INTL FCStone.

"We suspect gold will likely do better over the next few weeks."

Ratings agency Standard & Poor's stripped the US of its triple-A rating in August 2011, shortly after the debt ceiling was raised to $16.4 trillion following weeks of political negotiation. The US Treasury said last week that the government has now reached that limit, and is undertaking extraordinary measures aimed at keeping government debt from hitting the limit for another two months.

If the US hits the debt, the government would be forced to "default on its legal obligations", the Treasury says.

Over in Europe, Germany's manufacturing sector contracted at a slightly sharper rate in December compared to a month earlier, according to purchasing managers index data published Wednesday.

Contraction also accelerated for the Eurozone as a whole, although UK manufacturing moved back into growth territory, PMI figures indicate.

China's official manufacturing PMI meantime held steady at 50.6, with a PMI above 50 indicating sector expansion. Similar December data for the US are due to be published later today.

India, traditionally the world's biggest source of private gold demand, is considering raising the cost of importing bullion, the country's finance minister P. Chidambaram said Wednesday, adding that he expects the value of gold imports in the current fiscal year to be down 31% at $40 billion.

"This could dent demand for gold further," said Gnanasekar Thiagarajan, director at Commtrendz Research in Mumbai.

"Because of inflationary fears, the government is not increasing duty on other essential commodities. Since this does not affect the common man, government could be encouraged to increase duty further to curb imports."

The Indian government twice raised import duties last year, with the authorities citing gold imports as a major contributing factor the India's trade deficit.

By Ben Traynor
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Ben Traynor Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014