Gold prices tacked higher during thinly traded Asian trading hours on Monday as most markets remained open only for half day period or stayed shut on account of New Year eve; nevertheless, uncertainty as to the outcome of last-ditch efforts by lawmakers in Washington on fiscal cliff issue (which looked heading towards nowhere) is bound to keep investors in sidelines, seeking safety in U.S. dollar. Silver prices also edged higher in trading on Monday.
For the year, though, gold is well on course to post about 6 percent gain, a 12th successive yearly gain, thanks to extremely accommodative monetary policy adopted by the Federal Reserve and other global central banks across the world.
At around 6:00 a.m. EST, gold futures for February delivery gained 0.56 percent to $1,665.60 an ounce and spot gold edged up 0.59% to $1,664.60 an ounce.
It’s now just few hours left for the congressional leaders to find a solution on how to trim nation’s deficit before the yearend deadline ends. In case lawmakers fail to reach a deal (which looks very likely now), the U.S. economy is expected to sink in recession as series of automatic spending cuts and tax hikes from Tuesday will badly hit both businesses and average American in multiple ways. Not only across-the-board tax increase will dent monthly income of Americans, large-scale layoffs due to spending cuts (defense Industry etc) will knock down both consumer and business sentiment.
While the demand for safe-haven-bets, normally pick up in the backdrop of economic uncertainty, many analysts expect the metal to be under pressure as broader-asset-slump in case of economic slowdown will directly impact gold due to its tendency to track riskier assets in the recent past.
The U.S. dollar meanwhile edged higher against the euro on Monday, as investors sought safety in greenback. The WSJ $ Index, at last check, gained 0.11 percent, making dollar-dominated commodities expensive for traders dealing in other currencies.
Silver futures climbed 0.65% to $30.17 an ounce.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.