BLBG:Gold Gains as U.S. Budget-Deal Optimism Spurs Commodities
Gold climbed from a one-week low, gaining with other commodities including oil, on optimism U.S. lawmakers will reach agreement on the budget to avert automatic spending cuts.
President Barack Obama and House Speaker John Boehner are negotiating to avert the so-called fiscal cliff, more than $600 billion in tax increases and spending cuts set to start in January. Obama yesterday made a new offer that would raise taxes by $1.2 trillion and cut $1.22 trillion in spending, according to a person familiar with the talks. The U.S. Dollar Index, a gauge against six counterparts, held near a two-month low and crude rose for a third day.
“Gold broke back above the $1,700 level on optimism that a U.S. budget deal will be reached with a weaker dollar helping the move,” Cailey Barker, an analyst at Numis Securities Ltd. in London, said today by e-mail.
Spot gold rose 0.2 percent to $1,701.85 an ounce by 9:17 a.m. in London, advancing for a second day. It dropped to $1,686.70 yesterday, the lowest price since Dec. 7. Gold for February delivery gained 0.3 percent to $1,702.90 an ounce on the Comex in New York.
Gold rallied 8.8 percent this year, set for a 12th annual gain, as central banks from the U.S. to China and Europe took action to prop up economies, debasing currencies and increasing demand for bullion as a protection of wealth. The U.S. Federal Reserve last week expanded its asset-purchase program, pledging to buy $45 billion a month of Treasury securities starting in January.
“We expect subdued gold-trading action until the market is clear on the fiscal cliff negotiations in the U.S. Congress, where we see U.S. lawmakers striking an uneasy late deal over spending reductions and tax hikes,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote in a report.
Returns Survey
Precious metals will lead returns in 2013, rising as much as 25 percent, a Bloomberg News survey showed. Gold may rally to as high as $2,000 an ounce, according to a median of 49 forecasts, and silver may rise to $40.25 an ounce.
Silver for immediate delivery climbed 0.6 percent to $32.475 an ounce and is 17 percent higher this year. The best performing precious metal this year fell to $32.0612 yesterday, the cheapest since Nov. 8.
Spot platinum rose 0.5 percent to $1,614.49 an ounce, increasing 15 percent this year. Palladium was unchanged at $699.50 an ounce, adding 6.8 percent this year.
To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
