With Thanksgiving on Thursday, this was a short week for the Precious Metals market in the United States. The attention is still focused squarely on the fiscal cliff and the U.S. lawmaker’s ability to avoid it. Congressional leaders and President Barack Obama have publicly stated their optimism for a deal on the nation’s financial situation after only a few hours of talks last week before the president left for a three nation tour. The president reiterated his views Sunday in Bangkok where he said,  “I am confident we can get our fiscal situation dealt with.”  Traders seized on that sense of hope and drove prices up slightly on Monday. Even with the positive talk from U.S. leaders, analysts believe a solid resolution to the crisis could temporarily push down Gold prices. However, extremely low interest rates are prevalent and projected to stay low for the foreseeable future, causing inflationary fears. This concern is positive for the outlook of Precious Metals. The small gains made in the Gold price on Monday were lost when Federal Reserve Chairman Ben Bernanke gave his report to congress. The main speaking points regarded the fiscal cliff and the debt ceiling. With nothing new being said, there was no reason for much movement in the Precious Metal markets. Bernanke said that the current quantitative easing program will be ongoing until there is marked improvement in the economy.  Those kind of neutral statements leave little to no clarity to when the easing may end. On the topic of the fiscal cliff, the Chairman Bernanke stated the obvious, “A failure to reach a timely agreement this time around could impose even heavier economic and financial costs.”

GLOBAL ISSUES ABUNDANT

After eight days of fighting, there has been a cease-fire agreement reached in the Israel-Gaza conflict. The agreement was reached Wednesday by the two parties involved and was mediated by Egyptian President Mohamed Morsy and U.S. Secretary of State Hillary Clinton. The news sent both the U.S. stock market and price of Gold up. In Europe, the economic news continues to bring down the outlook of the region’s recovery. One of Europe’s historically strongest economies is showing signs of weakness. France has lost its AAA credit rating, and some economists are wondering now ifthe eurozone’s second largest economy is in jeopardy. France’s credit downgrade also comes with a negative outlook for the country’s financial future by Moody’s Investors Service. Guillaume Menuet of Citigroup wrote, “Given persistent downside risks to economic activity, we continue to forecast a mild (gross domestic product) contraction of 0.2 percent in 2013, with the 3 percent of GDP budget deficit target likely to be missed.” While the reports on the French economy are starting to surface, the economic issues in Greece are well know and ongoing. European finance ministers are working to cut the debt while keeping the peace in the region.  The first matter of business is to approve loans for Greece and look for ways to cut that country’s debt. “The Eurogroup this evening will take the necessary decisions to ensure the debt sustainability of Greece. It's essential that we will be able to decide on a set of credible measures on reducing the debt burden of Greece tonight. We must still reach an understanding on several details and I would expect that the chances are good that we will come to a final and joint solution this evening. But I'm not entirely certain,” the chairman of the eurozone finance ministers, Jean-Claude Juncker, said Tuesday. While there is no timeline set for this to be agreed upon, all sides agree the sooner the better.

Gold continues to float in the $1,720 - $1,730  range as we approach the holiday weekend. Though failure to reach a lending agreement in Greece was disappointing for investors who will need to wait until next week for further news, there is a vague sense of optimism regarding U.S. economic recovery. Federal Reserve Chairman Ben Bernanke boasted his hopes for the U.S. on Tuesday by stating that 2013 could be a “very good year” for the economy.

Along with Precious Metals prices, the U.S. stock market is up slightly ahead of Thanksgiving as investors felt a tinge of confidence in reports  that discussions regarding the end-of-year fiscal cliff are going well. However, global factors are still able to weigh on the U.S. economy as escalating tension in the Middle East is modestly elevating demand for Gold as a secure investment in times of uncertainty. “Physical demand is showing some strength,” Frank Lesh, a trader at FuturePath Trading in Chicago, said. “Middle East tension is also pushing some people towards Gold.”

At 1 p.m. (EST), the APMEX Precious Metals spot prices were:

• Gold, $1,731.90, Up $6.30.
• Silver, $33.39, Up $0.39.

Gold and Silver are trading higher this morning, as many traders may “want to be risk-off  ahead of the long weekend  – certainly there will be no expectation of fresh news about averting the fiscal cliff, but Europe will remain a concern and there’s the developing situation in the Middle East that has the potential to give cause for concern,” Fawad Razaqzada of GFT Markets said.  Regarding the situation in Greece, Razaqzada added, “Once again, the can that is the Greek debt crisis was resolutely kicked a little further down the road by the Eurogroup yesterday, ensuring once again that markets were left in just as uncertain a mood.”

Nick Trevethan of ANZ in Singapore said, “Gold seems well-supported  towards the $1,700 level, and the longer-term story hasn’t changed much,” which includes strong demand from China and central banks around the world.  All eyes appear to be firmly on the fiscal cliff, as Federal Reserve Chairman Ben Bernanke said yesterday that even the Fed does not have the tools to offset the potential damaged that would be caused by Congress failing to reach an agreement on the matter.

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

• Gold, $1,728.60, Up $3.00.
• Silver, $33.14, Up $0.15.

After Federal Reserve Chairman Ben Bernanke spoke today, the Gold price stuck to its trend of reacting to his speech. This time around, the movement was downward. The main speaking points regarded the fiscal cliff and the debt ceiling. With nothing new being said, there was no reason for much movement in the Precious Metal markets. Bernanke said that the current quantitative easing program will be ongoing until there is marked improvement in the economy.  Those kind of neutral statements leave little to no clarity to when the easing may end. On the topic of the fiscal cliff, the Chairman Bernanke stated the obvious, “A failure to reach a timely agreement this time around could impose even heavier economic and financial costs.”

In Europe, finance ministers are working to cut the debt while keeping the peace in the region.  The first matter of business is to approve loans for Greece and look for ways to cut that country’s debt. “The Eurogroup this evening will take the necessary decisions to ensure the debt sustainability of Greece. It's essential that we will be able to decide on a set of credible measures on reducing the debt burden of Greece tonight. We must still reach an understanding on several details and I would expect that the chances are good that we will come to a final and joint solution this evening. But I'm not entirely certain,” the chairman of the eurozone finance ministers, Jean-Claude Juncker, said. While there is no timeline set for this to be agreed upon, all sides agree the sooner the better.

At 5 p.m. (EST), the APMEX Precious Metals spot prices were:

• Gold, $1728.50, Down $7.90.
• Silver, $33.20, Down $0.05.

Precious Metals prices are flat this morning,  echoing trends seen with the U.S. dollar. Yesterday, that trend saw Gold rally approximately $20 per ounce as the dollar was sent lower by hopes that leadership in the U.S. will be able to get a fiscal cliff deal in place before the end of the year. Andrey Kryuchenkov of VTB Capital said, “It is fair to say that the market remains bullion positive in the long run, but in the near term much depends on global risk sentiment and the U.S. dollar trade. At the same time, risk aversion is not extreme enough to trigger safe haven buying while inflation expectations remain anchored for now (though we expect this to change later into 2013).”

France has lost its AAA credit rating, and some economists are wondering now if  the eurozone’s second largest economy is in jeopardy. France’s credit downgrade also comes with a negative outlook for the future by Moody’s Investors Service. Guillaume Menuet of Citigroup wrote, “Given persistent downside risks to economic activity, we continue to forecast a mild (gross domestic product) contraction of 0.2 percent in 2013, with the 3 percent of GDP budget deficit target likely to be missed.”

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

• Gold, $1,733.80, Down $2.60.
• Silver, $33.15, Down $0.10.

“Alternative currency” is the word chosen by ScotiaMocatta to describe Gold  in their Precious Metals 2013 Forecast for the yellow metal. The ScotiaMocatta is very bullish for Gold in 2013, estimating support on the low end at $1,600 an ounce with the potential for the metal to reach as high as $2,200. “As faith in policymakers wanes with their handling of the crises, we expect investors will not want all their wealth backed by paper assets and therefore will look to spread their risk by holding Gold and other hard assets,” ScotiaMocatta noted. “Greater monetarisation of Gold is likely to be bullish for prices.”

Many individuals have one concern on their mind and that is how the fiscal cliff may impact them. Federal spending cuts could affect local and state government programs, and looming tax increases can potentially reach all citizens.  Ratings agency Fitch is anticipating an unhealthy move in the U.S. economy resulting from the fiscal cliff  warning it might trigger a recession, causing the unemployment rate to rise above 10 percent.

At 5 p.m. (EST), the APMEX Precious Metals spot prices were:

• Gold, $1,733.50, Up $16.80.
• Silver, $33.16, Up $0.74.

Gold has rallied today to recuperate from losses realized last week. Geopolitical tension in the Middle East and reports from Washington concerning end-of-the-year budget talks continue to be the main market movers as both U.S. stocks and precious metals are up at mid-day. Christin Tuxen, analyst at Danske Bank weighed in regarding Middle Eastern turmoil and its effect on gold by stating, " We still have some fairly important tensions in that part of the world, hence there is a demand for safe havens, such as gold."

Most investor attention remains fixed on the U.S. fiscal cliff. Analysts believe a solid resolution to the crisis could temporarily push down gold. However, extremely low interest rates are prevalent and a projected to stay low for the foreseeable future, causing inflationary fears. This concern is positive for the outlook of precious metals.

The Dow Jones Industrial Average and S& P 500 are both up today  as confidence regarding a solution to the upcoming “fiscal cliff” and positive housing data have boosted the market.Homebuilder confidence rose to its highest level in six years  in November following the biggest sales month the real-estate market has experienced in ten years. Investors will continue to await a concrete declaration from policy makers in Washington that the approaching economic calamity we call the “fiscal cliff” is being resolved.

At 1 p.m. (EST), the APMEX Precious Metals spot prices were:

• Gold, $1,733.10, Up $18.80.
• Silver, $33.19, Up $0.77.