November 9, 2012
Safe-haven demand for gold has pushed prices higher on the Comex. Kitco reports December gold traded up $5.10 at $1,731.10 an ounce and spot gold was quoted down $1.40 at $1,731.25.
The increase arrives as Obama plans to deliver a speech on the fiscal cliff later today. David Plouffe, a top Obama adviser, believes Obama’s re-election is a mandate to raises taxes on the wealthy, thus ensuring a fight with the Republican-controlled House of Representatives and its leader, Speaker John Boehner, who said on Thursday he is steadfastly opposed to any increase in tax rates.
Dire economic news from the European Union is also driving gold higher. On Friday, the German finance ministry added to projections of a serious economic downturn in Europe by stating that in the months ahead Germany’s economy could “noticeably” weaken. On Thursday, the euro fell to a two-month low against the dollar following a move by the European Central Bank to artificially lower interest rates to 0.75 percent.
In the United States, continued support for Federal Reserve monetary policy has also helped move gold prices higher. “With Mr. Obama back, Mr. Bernanke is safe for the moment and we should see continued stimulus. That’s supportive for the gold market here,” Frank Lesh, futures analyst and broker at FuturePath Trading, told the Wall Street Journal.
Analysts, however, believe $1,800 is a formidable barrier. On Thursday, Credit Suisse said that the political status quo is “broadly positive for the gold price” and declines below $1,600 are not likely.
Kitco believes a bullish weekly high for gold signals further price increases in the weeks ahead. “The gold bulls’ next upside price breakout objective is to produce a close above solid chart resistance at $1,755.00,” Jim Wycoff writes this morning.
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This article was posted: Friday, November 9, 2012 at 11:23 am