Investing.com - Gold futures rose modestly in the early part of Monday's Asian session after U.S. policymakers made no progress on fiscal cliff negotiations. The U.S. Senate broke for the evening with no cliff resolution in place, but has promised to reconvene later today.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery added 0.17% to USD1,658.75 per troy ounce. Gold traded as high as USD1,659.45 per ounce and as low as USD1,655.95 per ounce in Asian trading Monday.
Amid light volume last week, gold futures lost 0.15%. Gold prices were likely to find support at USD1,636.45 a troy ounce, the low from December 21 and resistance at USD1,672.75, the high from December 20.
President Obama stated the obvious in a press interview Sunday when he said financial markets would be adversely impacted if Congress fails to craft a fiscal cliff resolution prior to the Tuesday deadline. Obama said his top priority to ensure that taxes on middle-class Americans do not go up.
However, with no fiscal cliff plan in place, Americans in all tax brackets and much of the world could be negatively affected. If Bush-era tax cuts expire, riskier assets could be imperiled as investors would presumably dump U.S. stocks due to the higher tax rate on dividends set to go into effect.
Additionally, USD600 billion in spending cuts could take place, draining U.S. GDP by 4%-5% and possibly sending the world's largest economy into another recession. It is expected that if a cliff resolution is not reached, almost USD110 billion of those spending cuts will take hold in January alone.
Even with the challenging headlines and a loss of nearly 3.5% in December, gold is seen with a 5.5% gain for 2012 meaning the yellow metal's 12-year winning streak is in tact.
Elsewhere, Comex silver for March delivery jumped 0.83% to 30.223 per ounce while copper for March delivery added 0.31% to USD3.599 per ounce.
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