Firstly, wishing all readers a Very Happy New Year in advance. As we give farewell to 2012 and welcome 2013 with a bang, we wish the same for the economy worldwide and for all markets.
Currently, the most talked about topic this new years eve is the "THE GREAT FISCAL CLIFF " and what effect will it have globally, once some decision is arrived on the same.
In simple terms, fiscal cliff refers to the economic effects that could result from automatic tax increases and a corresponding reduction in the US Budget deficit beginning in 2012 if existing laws remain unchanged.
Gold and silver continued to slowly change during recent days. The recent attempts of President Obama to reach an agreement with Congress regarding to avoid the fiscal cliff didn’t seem to impress investors of bullion up to now
The prices of gold and silver remained nearly unchanged in recent days as they have shifted with an unclear trend. This low movement is likely to continue especially as the trading volume is picking up following the holiday break. The recent U.S reports including new home sales and jobless claims may have contributed to the strengthening of the USD against some currencies and thus may have curbed the recent rise in the prices of gold and silver. Nonetheless, as long as the movement of precious metals remains low, this could be just a matter of market shifts or noise.
Investors and traders continue to worry about the U.S. fiscal cliff negotiations that have stalled and now with only a few days left for U.S. lawmakers to reach a deal. there was no progress on the matter as of Thursday afternoon. That did prompt some mild safe-haven demand for gold on Thursday. U.S. lawmakers have until January 3 to come to agreement before the government falls off the fiscal cliff. Uncertainty is not preferred by any market and hence most markets remain edgy as the deadline draws closer.
President Obama was due to hold talks with congressional leaders later on Friday, as part of ongoing negotiations on how best to tackle the US federal deficit. The US economy is due to hit the so-called fiscal cliff next week unless Congress agrees to halt planned spending cuts and extend tax cuts from the Bush administration.
The spot market gold price fell back to $1660 an ounce Friday morning, close to where it started the week, ahead of talks in Washington aimed at avoiding the $600 billion "fiscal cliff" of spending cuts and tax rises due within days.
Silver meantime eased back towards the $30 an ounce mark, while other commodity prices were little changed.
On the currency markets, the Euro fell against the Dollar Friday morning, dropping 0.6% in two hours, with traders blaming thin volumes and stop loss selling.
It’s also worth noticing the developments in India and China two of the leading importers of gold and silver worldwide. These economies haven’t performed well during 2012. Furthermore, the devolution of the Indian Rupee against the USD during the year (mainly during the first half of the year) may have curbed the demand for gold and could continue to do so in 2013. Nonetheless, if India and China will show signs of recovery during the year, this could contribute to the rise in the prices of gold and silver via an increase in the demand for these precious metals.
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