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Gold Prices drifted lower to $1722 per ounce this morning in London, slightly down on the week so far, while stock markets also fell along with US Treasury bonds as US policymakers continue to discuss how to deal with the so-called fiscal cliff.
"Gold is consolidating last week's strong up leg from $1673 to $1739," says the latest technical analysis from bullion dealer Scotiabank.
Silver Prices edged down to $32.38 an ounce, also slightly down on last week's close.
Broad commodities were little changed on the day by lunchtime in London, while on the currency markets, the Euro extended yesterday's gains against the Dollar following news that Greece has successfully raised the €5 billion it needs to cover a bond repayment this week.
Forty unions in 23 countries meantime were expected to take part in anti-austerity strikes across Europe today, according to the European Trade Union Confederation.
Police clashed with protestors in Madrid as unions in Spain and Portugal held their first ever coordinated strike, Reuters reports, bringing transport and manufacturing to a halt in many places.
Workers in Belgium, France, Greece and Italy were among those planning stoppages as part of the 'European Day of Action and Solidarity'.
In the US, President Obama plans to propose $1.6 trillion worth of tax rises on corporations and wealthy individuals over the next ten years, the Washington Post reports.
After meeting labor leaders yesterday, Obama will meet business representatives today as he continues his efforts to build support for his plans to avoid the so-called fiscal cliff of tax rises and spending cuts currently due at the start of January.
Democrats have said they would like to see tax cuts on the wealthiest 2% brought in under President Bush expire. Republicans have expressed opposition to this.
As well as letting the Bush tax cuts expire, the government will also need to impose additional taxes, according to US Treasury secretary Timothy Geithner.
"When you take a cold, hard look at the amount of resources you can raise from that top 2% of Americans through limiting deductions," Geithner said yesterday, "you will find yourself disappointed relative to the magnitude of the revenue increases that we need."
"Our short-term outlook continues to call for further gains in gold," says a note from brokerage INTL FCStone, "but we would not be surprised by a rather substantial correction once a fiscal cliff agreement is reached, particularly if the accord is more comprehensive in nature and not a patchwork job that merely kicks the can down the road."
"If we have brinkmanship, and we don't see a resolution, that could put downward pressure on gold," adds Deutsche Bank analyst Daniel Brebner.
Gold Prices will "take out $2000 [an ounce]," according to Brebner's colleague Raymond Key, Deutsche bank's global head of precious metals trading, speaking in an interview he gave in Hong Kong where he was attending the annual London Bullion Market Association conference.
"We'll go higher...that's on the view that [the Federal Reserve will] continue to print money."
The minutes of the most recent Fed meeting are published later today.
The Bank of England meantime has lowered its UK growth forecast to 1% for next year, down from its previous forecast of 2%.
In its quarterly Inflation Report published this morning, the Bank said "underlying growth is likely to remain sluggish in the near term".
"The subdued recovery reflects a judgment that the global environment will remain unfavorable," the Bank's governor Mervyn King said.
"We face the rather unappealing combination of a subdued recovery with inflation remaining above target for a while."
Consumer price inflation rose to 2.7% last month, figures published Tuesday show, the 36th month in a row it has been above the Bank's 2% target.
"Inflation is likely to remain above target for the first part of the forecast period," said King this morning.
"Nevertheless, the [Monetary Policy] Committee judges that inflation is likely to fall back in the second half of next year."
The global Silver Bullion market is expected to remain in surplus this year, with the surplus rising to 300 million ounces, Philip Klapwijk, global head on metals analytics at consultancy Thomson Reuters GFMS said Wednesday.
"We see weaker fabrication demand on two main reasons," said Klapwijk.
"One is industrial fabrication has slowed quite considerably this year, especially in recent months, and we see weakness especially in the electronics field and photovoltaic end users."
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