BLBG:Gold Swings Near One-Month High Before U.S. Vote on Debt
Gold swung between gains and declines near the highest price in a month before the U.S. House of Representatives votes today to suspend the country’s borrowing limit.
The Republican-led House will vote to pass legislation suspending the government’s $16.4 trillion debt limit until May 19. At that point, the U.S. borrowing authority would be automatically increased to accommodate the amount the Treasury borrows during the period. Indian gold demand may be “muted” in the next few days as buyers wait for clarity on details related to this week’s import tax increase, UBS AG said.
“If the vote passes, which is probable, this kicks the debt can down the road until mid-May,” David Govett, head of precious metals at Marex Spectron Group in London, wrote in a report today. “Gold needs to have a go at $1,700 an ounce if it is not going to slip back on stale liquidation.”
Gold for immediate delivery was little changed at $1,692.25 an ounce by 9:29 a.m. in London. Prices gained as much as 0.1 percent and fell as much as 0.2 percent today and reached a four-week high of $1,696.28 on Jan. 17. Gold for February delivery was down 0.1 percent at $1,692 on the Comex in New York.
Since 1960, Congress has raised or revised the debt limit 79 times, including 49 times under Republican presidents, according to the Treasury Department. Lawmakers have until March 1 before automatic spending reductions will start and until the end of that month to pass a bill to fund the government.
U.S. Debt
“They’ll have to do something,” said David Lennox, a resources analyst at Fat Prophets in Sydney, referring to U.S. lawmakers. “Every time that the U.S. goes deeper into debt, it influences gold prices to the upside.”
Gold rallied for a 12th year in 2012, the longest run of gains in at least nine decades, as central banks from the U.S. to China pledged more action to bolster economies. The Bank of Japan (8301) said yesterday it will buy 13 trillion yen ($147 billion) in assets a month next year and set a 2 percent inflation target.
Silver for immediate delivery fell 0.2 percent to $32.1738 an ounce. It reached $32.3438 yesterday, the highest since Dec. 18, as it climbed for a seventh straight day, the best run since August 2011. Palladium lost 0.2 percent to $725.50 an ounce. Platinum was down 0.2 percent at $1,692.99 an ounce.
To contact the reporter for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
