Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.4% as traders took profits and prepared for U.S. budget negotiations to go over fiscal cliff. With less than four days remaining before $600 billion in tax increases and spending cuts begins to batter the economy, President Obama called congressional leaders into a meeting today to try to forge an agreement but expectations were low and the markets reflected the pessimism. U.S. equities fell for the fifth straight session, with the Dow losing more than 1.2%, as investors turned toward cash, driving the dollar higher and gold lower. The other precious metals also fell, with silver and platinum shedding 0.9% and palladium 1.2%.

At the Comex close: February gold dipped $7.80 to t $1,656.30; March silver dropped 27 cents to $29.98; January platinum lost $14.40 to $1,517.4; and March palladium fell $8.20 to $700.30 an ounce.

Despite recent softness in the gold market, gold traders are at their most bullish since late August. In Bloomberg's most recent survey, nearly 80% of analysts expect gold prices to rise next week. If no budget deal is reached before January 1, gold is expected to rise on safe-haven inflows and investors take cover. If the fiscal cliff is averted, gold is expected to rise with risk assets on commodity demand. In 2013, gold is expected to extend its bull run to a thirteenth year of annual gains, gaining because of loose monetary policies, the ongoing eurozone debt crisis, and the rising risk of long-term inflation.