"The downward momentum [in precious metals] does appear to be slowing, with gold [on Wednesday] holding above the previous day's low of $1660 an ounce," says today's commodities note from Standard Bank.
Silver also ticked higher after spending most of this morning hovering just above $31 an ounce."A break below this key technical and psychological level could spell a swift move lower given the excessive length in the futures market," says Ground.
In Washington, the Republican-controlled House of Representatives is expected to hold a vote later today on the so-called 'Plan B' for dealing with deficit. The bill, advocated by Republican House speaker John Boehner, would extend tax cuts currently due to expire at the end of the month for anyone earning less than $1 million.?
President Obama has argued the threshold should be lower ? initially calling for it to be $250,000 before raising that to $400,000.
The White House has said it would veto 'Plan B' if it were passed by Congress, with Obama telling Republicans yesterday they should "peel off the partisan war paint".
"It seems investors are being held hostage by Washington politics and what is making things more difficult to figure out, is the fact that we have not been in such a predicament before," says INTL FCStone analyst Ed Meir, adding that optimism earlier this week that a deal might be done to avoid the so-called fiscal cliff as been replaced by "a distinct tone of acrimony and pessimism".
"Unfortunately for the gold bugs," says Meir, "neither scenario seems to be helping their cause much."
Greece meantime "still face[s] the possibility of bankruptcy" in 2013 despite the success of its recent bond buyback program and the release of ?34.3 billion in bailout funding, the country's finance minister Yannis Stournaras told the Financial Times Wednesday.
"What we have done so far is necessary but not sufficient to achieve a permanent solution for Greece," Stournaras said.
Yields on 10-Year Greek government bonds have fallen sharply in recent weeks, dropping to 22-month lows below 12% Thursday after the European Central Bank yesterday announced that it will again accept Greek debt as collateral.
The ECB's announcement followed the decision by ratings agency Standard & Poor's Tuesday to upgrade Greece's debt from 'selective default' to 'junk' status.
The Euro touched $1.33 yesterday for the first time since early April, while the Euro gold price looks set to record its biggest quarterly loss since the single currency launched in 1999.
The Bank of Japan extended its asset purchase and loan program for the third time in four months Thursday, adding a further ?10 trillion to take the total to ?101 trillion, while leaving its main policy interest rate at 0.1%.
His campaign leading up to last Sunday's election, Japan's next prime minister Shinzo Abe talked of the need for an "unlimited Yen" policy from the central bank as a way of fighting deflation.
"I take it as that the BoJ is carrying out what we sought during the election step-by-step," Abe said following the monetary policy announcement.
"The next step is [higher] inflation targeting," reckons Masamichi Adachi, senior economist at JPMorgan Securities in Tokyo.
"Abe is not even prime minister yet. If you look at how the BoJ is behaving, you could argue this is a loss of independence."
Following his victory on Sunday, Abe said that after he has formed his government it will issue a joint statement with the BoJ increasing the inflation target from 1% to 2%.
"The ultra-loose monetary policy of major central banks is an important cornerstone of the increase we expect to see in the price of gold next year," say precious metals analysts at Commerzbank in a note this morning.
"We do not therefore believe that today?s low gold prices are sustainable. Long-term ETF investors, for instance, remain loyal to gold and are not selling their holdings. What is more, the fact that the gold price in Indian rupees is also lower should help boost physical demand for gold during the ongoing wedding season in India."
"We saw very, very good demand on the physical front [on Thursday], mainly from the two centers in India and China, " Afshin Nabavi, senior vice president at precious metals refiner MKS, told news agency Bloomberg this morning.
Source: http://www.fxstreet.com/fundamental/analysis-reports/london-gold-market-report/2012-12-20.html
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