Almost the whole world is focused on the world’s biggest economy taking its fiscal cliff decision. An agreement is must and that will decide the future of US economy and to some extent even the global economy. Ratings firm Fitch said on Wednesday it is more likely to strip the United States of its triple-A status if a political deal is not reached to halt $600 billion of spending cuts and tax hikes set for early next year.
U.S. stocks and almost all the equity markets around the world are witnessing the best Bull Run over a long time as President Barack Obama and Republicans continued budget talks which are looking fruitful.
Beyond asset purchases by the U.S. Federal Reserve, as increased liquidity is usually beneficial for gold as some investors consider the metal to be hedge against inflation, uncertainties still linger over the U.S. "fiscal cliff" and debt ceiling, Gold prices have sunk to their lowest level in three months as pessimism over the US fiscal-cliff negotiations pushed prices below a key technical level, triggering a wave of selling.
Initially trading near unchanged, gold prices retrenched after House Speaker John Boehner said he was working on a back-up plan should US budget deficit talks with President Barack Obama fall through. The pair had been negotiating a deal to avoiding a sweeping package of automatic tax increases and spending cuts known as the fiscal cliff.
Investors turned aggressively against precious metals yesterday, as a generally quiet day turned into a dramatic sell-off after the London PM fix. Gold which has been struggling to unhinge itself from the $1,700/oz level, dropped to a low of around $1,660/oz. Physical buying was evident; although, even coupled with a weaker dollar this was not enough to turn the tide. Clearly, participants are feeling vulnerable. Dallas Fed President Fisher once again downplaying the benefits of QE yesterday did not help.
Gold is well supported at USD 1660 levels. Short term down trend is being witnessed and the bullish picture can only be witnessed after USD 1730. While Silver has not been able to cross the 34.50 mark, and it’s once again on its way to test the support level at 31.50. Only sustainable prices above 34.50 would improve the technical picture.
Gold and silver prices tumbled at the national front too on heavy selling by stockists sparked by global meltdown amid sluggish domestic demand at existing higher levels. While gold tumbled by Rs 500 to Rs 31,200 per 10 gm, silver dropped by Rs 1,300 to Rs 60,000 per kg. In addition, sluggish domestic demand at prevailing higher levels and some investors seen shifting their funds from weakening bullion to rising equity further dampened the sentiment, they said.
On the domestic front, gold of 99.9 and 99.5 per cent purity tumbled by Rs 500 each to Rs 31,200 and Rs 31,000 per 10 gm, respectively. The metal had climbed by Rs 275 in yesterday. Similarly, silver ready dropped by Rs 1,300 to Rs 60,000 per kg and weekly-based delivery by Rs 1,170 to Rs 60,680 per kg.
On the domestic front, gold of 99.9 and 99.5 per cent purity tumbled by Rs 500 each to Rs 31,200 and Rs 31,000 per 10 gm, respectively. The metal had climbed by Rs 275 in yesterday. Similarly, silver ready dropped by Rs 1,300 to Rs 60,000 per kg and weekly-based delivery by Rs 1,170 to Rs 60,680 per kg.
Gold importers in India, the world's biggest buyer of the metal, continued picking up bargains for weddings as a stronger rupee weighed on the yellow metal, extending losses to the lowest level in nearly two weeks.
Looking at the current scenario, safe haven metal status is being challenged which would allow the short term down trend to continue.
