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Gold gains as investors seek safety from U.S. budgetary impasses

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Investing.com - Gold prices jumped up in afternoon U.S. trading Friday amid demand from investors looking for safety as U.S. budget talks hit a fresh snag in Congress.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were up 0.59% at USD1,655.65 a troy ounce in U.S. trading, up from a session low of USD1,636.465 and down from a high of USD1,660.45 a troy ounce.

Gold futures were likely to test support USD1,636.45 a troy ounce, the earlier low, and resistance at USD1,677.85, Wednesday's high.

Investors flocked to gold to digest a budgetary impasse threatening to throw the U.S. economy into a recession next year.

Failure on the part of the White House and Congress to agree on a 2013 fiscal framework will allow sweeping tax hikes to kick in at the same time deep government spending cuts take effect, a combination known as a fiscal cliff that could contract the economy by 0.5% next year if Congress fails to avoid it, according to Congressional Budget Office estimates.

Republicans in the U.S. House of Representatives canceled plans to vote on a budget proposal tabled by Speaker Boehner, himself a Republican, which called for tax hikes on incomes over USD1 million, well above a White House proposal calling for tax hikes on incomes topping USD400,000.

Investors flocked to nicely priced gold positions to seek safety after rebellion in Boehner's own party sent rattled nerves.

Reports that central banks continue to stock up on gold to diversify reserve assets boosted prices also.

Meanwhile on the Comex, silver for March delivery was up 1.44% and trading at USD30.105 a troy ounce, while copper for March delivery was up 0.81% and trading at USD3.565 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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