Gold prices high on fiscal cliff uncertainties

On Thursday, gold prices inched higher hitting the highest level in two weeks. The rescue deal against the fiscal cliff supported the prices on the way up, though the end of the budget talks is yet to come and the issues in the US are still present.

The yellow metal started 2013 scoring a multi-week high. This came as result of the bill passed by the US legislators on Wednesday. The bill increases ensure tax relief for average and low-income citizen, while raises the stakes for high-earning individuals.

Read more: Gold’s golden age maybe coming to an end

Though, the fiscal cliff issue has another part which was left unsolved. About $109 billion domestic and military spending cuts has to be wisely disputed as soon as possible in order to prevent automatic budget cuts.

In times of such risky economic times, gold is seen a perfect store of value with a sanctuary status by many market players. Traders however may opt for stocks now, because the stock markets offer faster, even if more riskier returns. The physical metal activities have been cautiously observed across the stock markets, which are not certain about the effect of the fiscal cliff development.

By 06:46 GMT gold was up by $1.35 hitting a high of $1,687.70 per ounce. In the previous session, the commodity reached two weeks high above the $1,690 threshold.

By the end of 2012, the yellow metal reached it’s 12th year of gains in a row with 7% bullish run at the end of the period. History has no such record for longer bullish gain.

US gold for February was pretty steady trading at $1,688.30 per ounce.

Precious metals are locked in the next trading range, despite the fact that they are following equities at the moment.

Gold supply had yet to recover after the Christmas and New Year holidays as premiums for bullion bars traded flat in Singapore about $1.10-$1.20 per ounce to the spot prices in London. The purchase power of Indian traders as top player was put sideways.

The Central Bank in India demanded for value and volume limitations on gold imports from agencies and banks. Indian jewelers won’t be happy with this step, because it will cause certain effects on them. Such restrictions have been already used in countries like Thailand and Vietnam.

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