On Tuesday the United States financial markets started a shorten week, and Gold prices hit the highest point since Dec. 17 of last year. Early in the day, news of Japan continuing its monetary easing,  followed by two different reports from the U.S., gave the market a boost. Existing home sales and weak manufacturing reports from the Federal Reserve were both signs of slowing economic improvement in the country. Gold has been seen as a safe haven for investors during times of economic uncertainty, and Tuesday’s movement supported that sentiment.

Another positive sign for Gold this year has been in physical buying. Gold demand for this time of year is historically low.  However, this year has started off with a higher than average demand for the yellow metal.  “It was strong in November and that’s normally a usual seasonal pattern that we see coming through from Indian post-monsoon, wedding season buying. The fact that January is as high as we see in November usually, that’s unusual,” Marc Ground, a commodity strategist at Standard Bank in Johannesburg, said. Many experts point to the increased buying from central banks around the world and a change in import taxes on Gold in India as drivers of the higher demand.

There were events this week in the United States that gave reason for the Gold prices to drop. Analysts had expected an increase in jobless claims but the number of  Americans filing for unemployment benefits fell to its lowest level since January 2008. This is the second straight week of falling claims. The unemployment rate held steady at 7.8 percent. Although it appears many companies are not laying off workers as anticipated, they are adding new jobs at a slow rate.  Additional pressure came against Gold as the U.S. House voted to suspend the nations borrowing limit until May 19  in effect pushing the debt ceiling threat down the road. However, Morgan Stanley is optimistic for the yellow metal with a bright forecast of $1,720 for 2013 and $1,600 in 2014. “We expect that very low nominal interest rates, an ongoing commitment to QE3 and a below-par recovery with attendant pressure on the dollar will still combine to  encourage investment buying of Gold,” Morgan Stanley said in the report.

Basically the Gold price “will be  underpinned by ongoing accommodative central bank activity  and it's quite possible that it will find itself moving into more central banks' portfolios,” according to SP Angel analyst John Meyer. The U.S. Federal Reserve is due to make a statement Wednesday, and analysts believe this will give more clues as to future monetary policy, which has been the main driver of the Gold price recently.

Gold and Silver prices are trading slightly lower this morning, and Henrik Drusebjerg of Nordea Bank believes we may be seeing a shift in investor viewpoints. He said, “I guess there’s a tendency to a different mood among investors that has been very dominated by fear of different areas like the debt crisis and the fiscal cliff. Now it seems the fear’s more like, ‘what could I miss? Could I miss any returns if I remain too careful in my investment strategy?’  It’s the beginning of going from fear towards greed.”

The Gold price, however, “will be  underpinned by ongoing accommodative central bank activity  and it's quite possible that it will find itself moving into more central banks' portfolios,” according to SP Angel analyst John Meyer. The U.S. Federal Reserve is due to make a statement Wednesday, and analysts believe this will give more clues as to future monetary policy, which has been the main driver of the Gold price recently.

At 9 a.m. (EST), the APMEX Precious Metals spot prices were:

• Gold, $1,663.10, Down $8.80.
• Silver, $31.61, Down $0.15.

Analysts had expected an increase in jobless claims but the number of  Americans filing for unemployment benefits fell to its lowest level since January 2008.  This is the second straight week of falling claims.  The unemployment rate held steady at 7.8 percent.  Although is appears many companies are not laying off workers as anticipated, they are adding new jobs at a slow rate. Some economists caution while interpreting these numbers, there is usually a lot of volatility this time of the year. 

The Gold price fell overnight without breaking a key technical level.  For five days the Gold price has been just below $1,695 and ounce, an important level for Gold.    Additional pressure came against Gold as the U.S. House voted to suspend the nations borrowing limit until May 19  in effect pushing the debt ceiling threat down the road.

At 9 a.m. (EST), the APMEX Precious Metals spot prices were:

• Gold, $1,674.70, Down $14.00.
• Silver, $31.86, Down $0.62.

The Gold price is relatively flat while the Silver price is on an upswing this morning. Many investors seem to be waiting on the results of a vote to temporarily increase the debt ceiling until a longer term resolution can be put in place. Regarding the long-term picture for the Gold price, Standard Bank analyst Walter de Wet said, “We continue to see a lot of monetary easing  from the Bank of Japan and other central banks, and we think ultimately this will pick up Gold sentiment once again.”

With the House of Representatives set to vote on the debt ceiling later today, some strategists are warning of the  risks of the resolution failing to pass. The U.S. stock market is seeing an uptrend across the board since the beginning of the month, but these strategists say that can go away without a resolution. “The market is very dependent on government action. Any type of messy behavior or inconclusive action from the government has tremendous potential to derail this rally, which is almost predicated fully on government action,” Adam Sarhan of Sarhan Capital said.

At 9 a.m. (EST), the APMEX Precious Metals spot prices were:

• Gold, $1,694.50, Down $0.70.
• Silver, $32.37, Up $0.16.