The current US budget came up with lots of dissatisfactions to the overall commodity market and seemed only backing the securities market. The current statistics show that most of the metals; gold, silver, platinum and palladium fell only because the budget could not address the issues well.

Spot gold has seen a decline of 0.2 percent as per the records of both the US and the Singapore markets. A compiled data show that the bullion contracts to expire in February has come down by 0.4 percent against which oil and copper went up. There are still expectations that the prices will go up as the prices have come down a lot and there are all possible chances of price rise, therefore, the holdings of the metals have increased by almost 11 percent.

Currently, USA is going through a big problem of fiscal cliff which it has been trying to resolve soon. The financial lawmakers in the country have been trying to cut off more than $600 billion totaling the tax increment and the spending cuts to be started by January. The very newly elected but old president Barack Obama proposed of the higher tax rates, which was also his agenda during his election campaign, but the plan did not get approved in the House rather got the counter of $ 2.2 trillion deficit-cutting plan. Coming to the segment of the commodity market, experts believe that gold will actually be driven by the market sentiment in the short run as the investors will try keeping a hawk-eye on the negotiations for the fiscal cliff in the United States of America.

Gold contracts in Shanghai Gold Exchange also fell by 0.4 percent not showing a good vibe for the gold investors. There are chances that gold may advance as the businesses in the country offer lots of spending and the central bank stimulus measures are coming to the actual effect. Warren Buffet, in February letter to Berkshire Hathaway Inc. (BRKA), says “investors should avoid gold, because its uses are limited and it doesn’t have the potential of farmland or companies to produce new wealth”.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.