Gold recovered in after-hours trading as US politicians close meetings for the day on a positive note. Lawmakers from both sides of the bench are all saying that progress has been made and a final deal to avert a government default and to reopen government agencies is nearing and the US will avoid a default. Gold December 2013 fell 0.3% to 1,273.2 on the Comex division of the New York Mercantile Exchange. Meanwhile, silver futures slid 0.7% to USD 21.19 per troy ounce. Gold slipped for a fifth session out of seven on Wednesday as safe-haven bids slowed on hopes U.S. lawmakers would hash out a last-minute agreement to raise the debt ceiling before a Thursday deadline.
Fitch Ratings warned it could cut the sovereign credit rating of the United States from AAA, citing the political brinkmanship over raising the debt ceiling. While “Reckless” U.S. fiscal policy will likely force the Federal Reserve to stand pat on monetary policy this month, said Dallas Fed president Richard Fisher in a speech late last evening.
Gold premiums in India, the world’s biggest buyer of the precious metal, hit a record $100 an ounce, about 8 percent over London prices, on a shortage of supplies to meet festival demand, traders said on Tuesday. Chinese gold output rose 8.2% to 270.167 tons from January to August 2013, year over year, according to data from the China Gold Association. The association also said that August production was down slightly to 37.978 tons from 39.367 tons in July. China is the world’s largest gold producer for the 6th year in a row and is on track to soon overtake India as the top consumer. In 2012, Chinese gold consumption rose 9.35% to 832 tons. And in the first half of 2013, consumption jumped a remarkable 54% year over year. The boost in demand has been credited in large part to Chinese weddings, which account for roughly 50% of all Chinese domestic bullion consumption. Chinese and Indian customs is to give items of gold for wedding and personal holding of gold jewelry as a sign of wealth.
Unfortunately for gold investors, ETF’s are selling off the precious metal holding at a record pace which continues to weigh on the value of gold. Some investors buy gold as a hedge against economic turmoil, and prices have generally pointed lower in recent weeks as investors bet that politicians would avert a breach of the U.S. borrowing limit. But gold prices pushed higher in after-hours trade following reports that a Senate effort to craft a bipartisan plan had stalled. Futures snapped as high as $1,287.70 an ounce, a rise of 0.9%, before paring those gains. Thursday is the deadline set by the Treasury Department to raise the federal borrowing limit. The markets are still unsure if there is an actual movement forward or backward (on the shutdown),” a CME Group analyst wrote. “However, if it appears that the U.S. is likely to encounter a default, gold prices might return to a safe-haven status.”
In other metals trading, December high-grade copper lost about one cent to $3.30 a pound. January platinum climbed $3.10, or 0.2%, to $1,386.50 an ounce and December palladium added $1.65, or 0.2%, to $707.95 an ounce
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