Gold Stays Quiet Before Vote

Republican leaders are today hoping to pass a near-four month US debt limit extension, a move which has been welcomed by the White House. Goldman Sachs said earlier in a report that they expect to see the gold price climb over the next few months as the US works to contain debt issues. As we know from previous experience, each time the US goes further into debt, the gold price rises.

Gold is still struggling to break through $1,700, it did see a one-month high earlier in over-night trading however. Support is still to be found in Asian buying, a weak dollar-index and higher crude-oil prices. Silver is little changed at $32.19.

Japan and gold investment
It seems in Japan, citizens continue to express their feelings about the economy with their feet. Tanaka Kikinzoku Kogyo K.K., Japan’s biggest bullion retailer, reported gold sales increased in 2012 for the eighth year running. After yesterday’s increase in the inflation target to 2%, from the Bank of Japan, we expect that this time next year we’ll be seeing similar results as more rush into gold investment.

Yesterday was fairly tedious in terms of gold and silver news; it seems markets were still in holiday mode following Martin Luther King Day. However positive data from Western economies, for example Germany’s ZEW index, has helped to bolster demand for stocks and industrial precious metals, leaving gold slightly out of the spotlight in the short-term.

Bloomberg reports this morning that The Standard Bank Gold Physical Flow Index signalled January demand climbed to the highest since November last year. The Bank points to ‘unusually’ high demand for this time of year, given religious and wedding celebrations increasing demand usually towards the end of the year. Analysts are pointing to increased demand prior to the tariff on gold starting this week.

Here in the UK, Joe Public has woken up to reality as the papers report that, ‘despite Osborne’s efforts’ the Chancellor has failed to bring the deficit down. The debt has now hit £1.1 trillion following December’s deficit coming in at £15.4bn, an increase of 3.8% from the year before.

This morning UK Prime Minister David Cameron gave a speech on the EU. As expected he offered an in-out referendum by the end of 2017, should he be re-elected.

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