Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
Swiss Gold Referendum A Golden Opportunity for Switzerland - 25th Nov 14
Silver: What COT Analysis Tells Us - 25th Nov 14
Stock Market Big, Bold and Ugly - 25th Nov 14
U.S. Dollar Near Top? Gold and Silver Trading, Platinum Breakout Invalidation - 25th Nov 14
Buy Fear - Easily Pick Up Profits on Stock Market Dips - 25th Nov 14
The Islamic State Reshapes the Middle East - 25th Nov 14
Gold Price Forecast 2015 - 25th Nov 14
The Swiss Referendum On Gold: What’s Missing From The Debate - 25th Nov 14
Clash of Generations - Why Millennials Still Live at Home; Not Jobs, Student Debt, or Housing - 25th Nov 14
Stock Market Reminiscent of Pompeii - 25th Nov 14
Once Upon A Time There Were Philosopher Kings - 24th Nov 14
The 2014 Crude Oil Price Crash Explained - 24th Nov 14
China Stock Investing - Follow the Money! - 24th Nov 14
122 Tonnes of Gold Secretly Repatriated to Netherlands - 24th Nov 14
What Causes the U.S. Dollar to Move? - 24th Nov 14
Stock Market Indexes New Highs - Will Uptrend Extend Even Further? - 24th Nov 14
All Hail the King U.S. Dollar - Trend Forecast - 24th Nov 14
Where Is China Economy On The Map Exactly? - 24th Nov 14
Most of The World Economies Panic - Is The US Next? - 24th Nov 14
Stock Market Exhaustion Gap? - 24th Nov 14
Gold Golden Gains Come After The Pain - 24th Nov 14
Crude Oil and Stock Market Setting The Stage For The Next Recession - 23rd Nov 14
This Publicly-Owned Bank Is Outperforming Wall Street - 23rd Nov 14
Who’s Ready For $30 Crude Oil Price? - 23rd Nov 14
Strategic, Methodological and Developmental Importance of Knowledge Consumption - 23rd Nov 14
Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - 23rd Nov 14
Gold Price 2015 - 22nd Nov 14
Stock Market Medium Term Top? - 22nd Nov 14
Is the Gold And Silver Golden Rule Broken? - 22nd Nov 14
Malaysia's Subsidy and Budget Deficit Conundrum - 22nd Nov 14
Investors Hated Gold at Precisely the Wrong Time: What About Now? - 22nd Nov 14
Gold and GLD ETF Selloff - 22nd Nov 14
Currency Wars, the Ruble and Keynes - 21st Nov 14
Stock Market Investor Sentiment in The Balance - 21st Nov 14
Two Biotech Stocks Set to Double on One Powerful Catalyst - 21st Nov 14
Swiss Gold Poll Likely Tighter Than Polls Suggest - 21st Nov 14
Gold's Volatility and Other Things to Watch - 21st Nov 14
Australia Stock Market and AUD Dollar Analysis (ASX200 and AUDUSD) - 21st Nov 14
New Algae Research May Have Uncovered an “Energy Forest” Under the Sea - 21st Nov 14
The Cultural and Political Consequences of Fiat Money - 20th Nov 14
United States Social Crisis - No One Told You When to Run, You Missed the Starting Gun! - 20th Nov 14
Euro-Zone Tooth Fairy Economics, Spain Needs to leave the Euro - 20th Nov 14
Ebola Threat Remains a Risk - New Deaths in Nebraska and New York - 20th Nov 14
Stock Market and the Jaws of Life or Death? - 20th Nov 14
Putin’s World: Why Russia’s Showdown with the West Will Worsen - 20th Nov 14
Making Money While The World Burns - 20th Nov 14
Why This "Quiet Zone" Is Now Tech Stocks Biggest Profit Sector - 20th Nov 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Gold Report 2015

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