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.

Congressional leaders and the President have publically stated optimism for a deal after only a few hours of talks last week, before the president left for a three-nation tour. The President reiterated those comments Sunday in Bangkok where he said,  “I am confident we can get our fiscal situation dealt with.”  Traders have seized on this sense of hope and have driven the markets up.

The Gold price gained overnight too as a weaker dollar and Middle East concerns highlighted the safe haven appeal of the precious metal.  David Govett, head of precious metals at Marex Spectron Group in London said about the Gold price’s gain, “The situation in the Middle East continues with Israel continuing it’s targeting of Gaza and this in turn has also led to some buying.” Holdings in gold-backed exchange-traded products rose to a record 2,603.7 metric tons on Nov 16.

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

• Gold, $1,733.10, Up $16.40.
• Silver, $32.99, Up $0.57.

As the week comes to an end, the news surrounding the United States’ fiscal cliff is the main topic of conversation. The question remains what, if anything, will be done to avoid this possible recession making event. “What people don’t like in markets is uncertainty,” said Gilles Sitbon at Sycomore Asset Management in Paris. “People are waiting for one thing that could make the market go down. People are ready to pull the trigger. And if nothing happens, then you can get a grind higher. It’s confidence building.”

Long-term stability and safe haven appeal have proven Gold is a popular investment in times of such uncertainty. Precious Metals refiner Heraeus said in a report, “Whilst the uncertainty around the U.S. presidential elections came to an end with Obama’s win, the so-called fiscal cliff is now the omnipresent topic. It describes cutbacks and tax increases in case a budget for new indebtedness cannot be agreed. Due to the strong opposition in Congress, difficult negotiations can be expected and hence new volatility and uncertainty,” which historically have been very supportive of the Gold price.

While the stock market has been falling in fear of the fiscal cliff looming over the United States economy, Gold has moved in a more positive direction,  seeing more than a three percent boost over the past week.  “I think many people feel that the can will continue to get kicked down the road. The outcome of the election seems to show there is not an appetite for major tax increases or meaningful cuts in spending,” Christopher Blasi, president of Neptune Global Holdings LLC in Wilmington, DE, said. “So even if there are compromises to avoid the cliff in the short-term, the fundamentals are still there for Gold to keep rallying.”

On Friday, congress and the president began negotiations to try to find common ground on $600 billion in tax hikes and across-the-board spending cuts that will otherwise automatically take effect in January.  The fear is that if our leaders don’t come to terms, the measures could push us back into recession.  Rebecca O’Keefe, head of investment at Interactive Investor in London, said, “Investors will be hoping that there is enough collective desire to reach agreement, [but it is] almost inevitable that discussions will be protracted and go down to the wire, which is likely to keep markets erratic and volatile over the coming weeks.”

EUROPE’S BALANCING ACT

This week in Europe brought forth some accomplishments and some anger. While the U.S. was observing a holiday on Monday, Greece was hard at work.  The Greek parliament has come to an agreement for new austerity measures in 2013  along with a structural development plan to meet the requirements for the next release of 31.5 billion euros for use as emergency loans for the eurozone. It is still unknown whether Greece will be completely bailed out of its financial crisis as a compliance report by the troika calculated a total of 32.6 billion euros would be needed by 2016 in order to sustain the fiscal disaster. “I'd like to see if Greece has fulfilled all its obligations and then I'd like to hear the (EU/IMF) troika report because it depends on the Greek government having found a solution with the troika, and I haven't read anything on that,” German Finance Minister Wolfgang Schaeuble said.

With this action by the Greek parliament, the European Union has given Greece a two year extension to the monetary bailout program.  Without this leeway, there was a good chance the country would default and possibly send them out of the union completely.  Greece passed new measures to help with their financial woes however, it is not winning over doubters. “The key risks concern the overall policy implementation, given that the coalition supporting the government appears fragile and some components of the program face political resistance, despite the determination of the government,” the report by the troika made up of the European Commission, European Central Bank and IMF said.

While these actions may have been a step in the right direction in the eyes of the European leaders, the citizens of the region did not see it in the same light. As governments in Europe start to implement spending cuts to help curb the region’s growing debt, citizens have taken to the streets in protest. Spain and Portugal have seen a massive stoppage of flights, ports, trains and factories.  This is the first time the two countries’ major labor unions have organized one general strike.  While the governments try to appease the masses, the people don’t see it helping. “I’m on strike because those who work are basically being blackmailed into sacrificing more and more in the name of debt reduction, which is a big lie,” said Daniel Santos de Jesus, who teaches architecture at the Lisbon Technical University.

Thursday’s European market activity ended showing the eurozone had slipped back into recession for the third quarter, which is likely to continue into the current quarter.  The eurozone economy as a whole contracted 0.1 percent in the third quarter. This is on the heels of a 0.2 percent contraction from the second quarter. This news is troubling for the U.S., as Europe is our largest trading partner.

Congress and the president begin negotiations today trying to find common ground on $600 billion in tax hikes and across-the-board spending cuts that will otherwise automatically take effect in January.  The fear is that if our leaders don’t come to terms, the measures could push us back into recession.  Rebecca O’Keefe, head of investment at Interactive Investor in London, said, “Investors will be hoping that there is enough collective desire to reach agreement, [but it is] almost inevitable that discussions will be protracted and go down to the wire, which is likely to keep markets erratic and volatile over the coming weeks.”

Gold may be a beneficiary of the fiscal cliff as it has many people on edge. Gold is seen as a safe haven for their money.  Peter Schiff, CEO of Euro Pacific Precious Metals in New York, said, “I think the price of Gold is going to go a lot higher than $2,000” and that people’s lack of understanding of the country’s current economic challenges is keeping the price down.

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

• Gold, $1,714.50, Down $1.40.
• Silver, $32.50, Down $0.23.

The global economic condition has become a great concern for the financial market recently. The European financial crisis has been prolonged, and containing the predicament from spreading to other countries is a difficult task. Today, U.S. weekly jobless claims climbed to 439,000, which analysts say was a result of Hurricane Sandy. Another obstacle the Gold price is facing is a slowdown in demand from China, the world’s second-largest consumer. “The combination of the Anglo miners going back to work and the World Gold Council report showing Gold demand falling is pressuring Precious Metals,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview.

Federal Reserve Chairman Ben Bernanke declared the Fed’s intention to take action to create growth in the U.S. housing market. “We will continue to use the policy tools that we have to help support economic recovery,” he said today in Atlanta, GA. Bernanke is well known for his fondness to monetary stimulus that assists the country during difficult economic times with programs such as quantitative easing. “Continued weakness in housing — reflected in falling prices, low rates of new construction and historic levels of foreclosure — has proved a powerful headwind to recovery,” he continued. “It is encouraging, therefore, that we are seeing signs of improvement in the housing market in most parts of the country.”

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

• Gold, $1,717.70, Down $14.40.
• Silver, $32.66, Down $0.29.

Pervasive concern over Europe’s debt crisis and U.S. budget troubles  have pushed equity markets lower for the seventh day, dragging down Precious Metals prices as well. “The fall to session lows in Gold is driven by equities,” Peter Fertig, a consultant with Quantitative Commodity Research, said. Historically, Gold and equities markets have carried an inverse relationship. However, Nic Brown, an analyst with Natixis, commented on the similar pattern Gold and equities are currently following by saying, " You get periods of high correlation between risky assets, and this seems to be happening now.”

Despite reports from the World Gold Council that demand for physical Gold is down this year compared with 2011,  financial specialists remain bullish on the outlook for Precious Metals  as domestic and global economic concerns continue to plague investors. “Investors are clearly worried about the looming fiscal cliff and are appropriately increasing their bullish positions in Precious Metals,” GFT Markets technical analyst Fawad Razaqzada said. Other analysts weighed in by adding, “A lack of progress in resolving the ‘fiscal cliff’ issue would be Gold-friendly…The path of least resistance appears higher for bullion.”

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

• Gold, $1,715.00, Down $17.10.
• Silver, $32.57, Down $0.38.