"Technical Risk" Could Mean "Another Leg Lower" for Gold Price, Obama to Hold More Fiscal Cliff Talks - 28 December 2012
The Gold Price dipped back below $1660 per ounce Friday morning, close to where it started the week, as stock markets also edged lower, ahead of talks in Washington aimed at avoiding the $600 billion "fiscal cliff" of spending cuts and tax rises due within days.
Gold will break its four-week losing streak today if the spot price ends the week above $1657 an ounce, while spot silver needs to close above $30.03 an ounce to do likewise.
"The weight of the [gold] market still overhangs with resistance seen at $1673, the November low, and $1685, the December support," says the latest technical analysis from bullion bank Scotiabank.
"While the market holds below $1685 the technical risk remains for another leg lower."
"There's some buying but you don't see heavy activity," one physical gold bullion dealer told newswire Reuters this morning.
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.
President Obama is due to hold talks with congressional leaders later today, 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.
Democrats have proposed maintaining the Bush tax cuts for anyone earning $250,000 a year or less, while Obama has indicated he would consider raising that threshold to $400,000.
Republican House of Representatives speaker John Boehner meantime has said he would consider allowing the cuts to expire for anyone earning more than $1 million a year, after previously expressing outright opposition to a rise in taxes. Boehner included this proposal in his so-called 'Plan B' last week, but failed to garner enough support from fellow Republicans for it to be put to a House vote.
"The way to avoid the fiscal cliff has been right in the face of Republican leaders for days and days and days," Senate majority leader Harry Reid, a Democrat, told the Senate Thursday, adding that Boehner's unwillingness to agree a deal is motivated by concerns about being re-elected speaker of the Republican-controlled House next week.
"I say to the speaker, take the escape hatch that we've left you. Put the economic fate of the nation ahead of your own fate as Speaker of the House."
"Republicans aren't about to write a blank check for anything Senate Democrats put forward just because we find ourselves at the edge of the cliff," countered Republican Senate minority leader Mitch McConnell.
"That having been said, we'll see what the president has to propose."
"Time is running out for the long-awaited solution in fiscal-cliff negotiations," says Kai Fachinger, portfolio manager at Sustainable Asset Management in Zurich.
"As the positions of the two parties are just too far off, it's likely to happen in the very last second."
"[We expect a] deal to happen at the last minute," agrees Dominic Schnider at UBS Wealth Management.
"But it will be a minimal deal...I think that should be gold supportive."
Vietnam's central bank meantime will play the role of market maker in the gold market next year in a bid to control the domestic gold price, Vietnamica reports, citing comments from State Bank of Vietnam governor Nguyen Van Binh.
Earlier this year the SBV claimed the exclusive right to manufacture gold bars in Vietnam.
Buying gold? See how BullionVault could dramatically cut your costs...
The London Gold Market Report is the daily market review from BullionVault, the world's largest physical gold and silver market for private investors. A full member of professional trade body the London Bullion Market Association, BullionVault publishes the LGMR every day that the market is open, bringing you insider comment and analysis from the very center of the world's $240 billion-a-day physical gold trade, and putting the latest gold price action into its wider financial and economic context