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.