Interested in trading gold futures? You may want to know that these futures plummeted to their lowest price in three months on December 18, as well as the major events that coincided with these falling contract values.
MarketWatch reports that investors were swayed by the continued discussions of Washington lawmakers as well as Greece having its credit rating boosted by Standard & Poor's.
"Gold is not looking like a safe haven as Greece gets an upgrade and going over the fiscal cliff looks less likely," Phil Flynn, senior market analyst at the Price Futures Group, told the news source. "Stocks look like a better bet and bond yields are providing a better return."
The media outlet reports that February gold settled at $1,670.70 an ounce on the Comex division of the New York Mercantile Exchange, which represented the lowest value for the contract since August 30. Bloomberg reports that the contract was trading at this price at 1:44 p.m. on the Comex in New York.
These falling gold prices were attributed to many factors, including the decision made by Standard & Poor's to increase the credit rating of Greece up by one level to B minus with a stable outlook from selective default, according to the news source.
One major factor that generated substantial visibility was a proposal made by House Speaker John Boehner in an effort to avert the fiscal cliff. He suggested that the tax cuts passed under President George W. Bush be extended with the exception of cuts made for the wealthiest Americans.
The White House showed no interest in Boehner's proposal, which was referred to as "Plan B," or in other words a contingency plan that can be used in the event that lawmakers do not succeed in arriving at an agreement on federal tax policy and budgetary spending, according to FoxNews.com.
Boehner suggested that taxes only be increased for households making more than $1 million per year, and said that entitlement spending should be reduced in 2013. White House Press Secretary Jay Carney sharply criticized the proposal, stating that it "doesn't ask enough of the very wealthiest in taxes and instead shifts the burden to the middle class and seniors" and is not capable of passing the Senate.
The fiscal discussions being held by Washington lawmakers have drawn substantial visibility since the election on November 6 resulted in the the White House once again having a Democratic president and the House of Representatives having a Republican majority.
The two parties have parried back and forth, using different proposed plans in an effort to resolve the needs of the two sides. If lawmakers do not succeed in reaching an agreement on federal taxation and expenditure by January 1, the consequences are expected to be significant. The nonpartisan Congressional Budget Office has predicted that going over the fiscal cliff will push the U.S. into recession in 2013.
Bloomberg reports that until federal fiscal policy is more reasonable, investors will drive up the price of gold.
"If we're seeing something substantial come out of the budget talks in terms of finally getting spending under control, then that’s bearish for gold," Edward Meir, an analyst at New York-based INTL FCStone Inc., told the media outlet in a telephone interview. "Gold has its hay day when spending is out of control."
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