Best of the Week
Most Popular
1.The Trump Reset, US Empire's Coming Economic, Cyber and Military War With China (2/2) - Nadeem_Walayat
2.Now Is the Time to Buy Gold - 5th Jan 17 - John Grandits
3.CIA Planning Rogue President Donald Trump Assassination? Elites "Manchurian Candidate" Plan B - Nadeem_Walayat
4.The Trump Reset - Regime Change, Russia the Over Hyped Fake News SuperPower (Part1) - Nadeem_Walayat
5.Most Popular Financial Markets Analysis of 2016 - Stock Market Crash Postponed Again - Nadeem_Walayat
6.No UK House Prices Brexit Crash 2016 Despite London Weakness, Forecast 2017 - Nadeem_Walayat
7.President Trump Understands the NSA, CIA... LIE, America's Intelligence Agencies Crime Syndicate! -Nadeem_Walayat
8.President Donald Trump's 2017 New Year Message, BBC Fake News, Was 2016 a Dream? - Nadeem_Walayat
9.Major Stocks Bear Market Still Looms - Zeal_LLC
10.Biased 2017 Forecasts - Debt, Housing and Stock Market (1/2) - James_Quinn
Last 7 days
The Last Time This Happened, Biotech Stocks Plunged by 50% - 24th Jan 17
The Future of Pharma In The Age Of Trump - 24th Jan 17
How Bond Market Investors Were Fooled Twice - 24th Jan 17
Gold price to 2 month high as fiery Trump declares New American Order - 24th Jan 17
Why Gold Is Oddly Looking Bullish - 24th Jan 17
EURO, GBP, AUD, JPY, CAD C.O.T Reports - 24th Jan 17
United States Common Sense - 2017 - 23rd Jan 17
Is Dow 20,000 a Bridge Too Far? - 23rd Jan 17
The New Gold Rush Of 2017! - 23rd Jan 17
HBO HOMELAND Bet on HIllary Clinton Winning US Election and LOST - 23rd Jan 17
Stock Market New Highs For 2017? Yes, But When Do I Enter? - 22nd Jan 17
Active vs Passive Investing: And the Winner Is ... - 22nd Jan 17
The Epidemic of Bad Ideas - 22nd Jan 17
Gold Futures Prices Looking Bullish - 22nd Jan 17
Time for Crude Oil Price Drop below $50? - 21st Jan 17
AI and Robotics - We Are All Low-Skilled Workers Now - 21st Jan 17
The Trump RESET Starts on US Presidential Inauguration Day 2017 - What to Expect - 20th Jan 17
Will the CIA Assassinate Rogue President Donald Trump Like JFK? - 19th Jan 17
Bonds, Dollar, Stocks, Gold, Silver Major Markets at Turning Points - 19th Jan 17
Populism; the Danger? What About Debt? - 19th Jan 17
Gold Price 50-DMA Breakout - 19th Jan 17
Turkey, 'Axis of Gold' and End of US Dollar Hegemony - 19th Jan 17
The Most Important Market Chart on the Planet - 19th Jan 17
Trump Deficits Will Be Huge - 19th Jan 17
Stock Market Trading Patience Pays Off with CHK Using Momentum Reversals - 19th Jan 17
Gold - How to "Buy Low and Sell High" Like a Pro - 19th Jan 17
State of the Global Stock, Financial and Commodity Markets Report 2017 - 19th Jan 17
The Hunt for Russia's Next Enemy - 18th Jan 17
Returning Gold Bulls - 18th Jan 17
Biotech Breakthrough Could Create A $11.4 Trillion Opportunity - 18th Jan 17
Bitcoin and Gold - Outlook, Volatility and Safe Haven Diversification - 17th Jan 17
Stock Market Uptrend on Borrowed Time - 17th Jan 17
The One Stock to Retire On - 17th Jan 17
Trump anti-Communist Counter Revolution - 17th Jan 17
US Stock Market Update as the Trump Inauguration Approaches - 17th Jan 17
The American Crisis - Common Sense 2017 - 17th Jan 17
Obama Leaves, Hope Arrives, Will Stupid Stay? - 17th Jan 17
Damage Inflicted by Precious Metals Manipulation Is in the “Multi Billions” - Keith Neumeyer - 17th Jan 17
Gold Price Forecast 2017 Update - Video - 17th Jan 17
The Story of the U.S. Regime Change Plan in the Philippines - 16th Jan 17
Gold Price 2017 Trending Towards $1375 as Forecast - 16th Jan 17
'Deep State' CIA Director States We are Not NAZI's, Warns Trump Does Not Understand Russian Threat - 15th Jan 17
UK House Prices Forecast 2017 - Crash or Bull Market? - Video - 15th Jan 17

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

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

© 2005-2016 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

Catching a Falling Financial Knife