“Gold advanced, poised for a 12th annual gain, as U.S. lawmakers struggled to reach a budget deal before automatic tax increases and spending cuts start to take effect from tomorrow, boosting demand for a haven.
Gold for immediate delivery advanced as much as 0.3 percent to $1,660.60 an ounce and was at $1,660.10 at 9:35 a.m. in Singapore. Prices have gained 6.2 percent this year as central banks from Europe to the U.S. to China pledged additional stimulus to spur economic growth.
Senate Majority Leader Harry Reid rejected the latest Republican offer to resolve the crisis as Minority Leader Mitch McConnell reached out to Vice President Joe Biden to try to break the impasse. Congress is working to avert more than $600 billion in tax rises and spending cuts, known as the fiscal cliff, and a failure risks a recession, the Congressional Budget Office has warned. The Senate will resume its session today.
“There’s a murky cloud over the outlook in the short term that’s purely being driven by the U.S. fiscal deadlock,” said Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne. “Once that’s resolved, there’s better clarity in the market, gold has more upside than downside risk.”
Gold, down 6.3 percent since September and set for the biggest quarterly drop since 2004, may climb to $2,000 next year, the median of 49 estimates in a Bloomberg survey published on Dec. 18 showed. Morgan Stanley said Dec. 6 that bullion will be among next year’s best-performing commodities. Prices may peak in 2013 as the U.S. recovers, Goldman Sachs Group Inc. predicts…”
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