The yellow metal extended its winning streak to 12 years by closing on a year on year profit in December 2012. But gold did lose its fame of being safe haven during the volatile market conditions. During the first week of December, Gold capped its biggest weekly drop in more than five months on concern that U.S. lawmakers may fail to reach a settlement in talks aimed at avoiding self-imposed tax increases and budget cuts. Gold fell 2.2% in the week. Gold fell 0.42% during the second week of December with discussions around fiscal cliff going nowhere. In addition to this, the strong dollar appealed to the buyers. The lower prices attracted the buyers towards the end of second week and carried the same momentum to the third week. The gains were pared by the end of third week on the basis of some encouraging industrial data and ended the week with a 0.50% loss. Weaker Euro and stalled discussions on fiscal cliff in US boosted the dollar and gold recorded a four – month low during the next week. Focus on US cliff talks and last week’s gold price lows kept the traders skeptical and gold ended the last week of the year on a low. But the year on year return remained positive making it another successful year of the yellow metal.
Gold started the year on a positive note on the back of US fiscal cliff deal. But the U.S jobs data which reported an addition of 155,000 jobs in the month of December made the investors skeptical about the duration of stimulus plan. With the positive data coming up most of them felt that Federal Reserve may cut short its stimulus packages which was directly linked to the economic growth. Gold’s losing streak in terms of week on week returns continued. Gold started the second week of January on a positive note but ended it with decline due to high inflation data from China. With increase in investor demand in United States and GDP growth rate in China, yellow metal was favored by the investors during the third week of January. It recorded the best week in past three months. The U.S jobs data showed that though the payrolls rose, jobless rate also remained at previous levels. With the speculations around more stimulus which can raise the inflation rates, gold ended the month on a high. We expect bullion to continue its downward trend for the immediate short term.
