LONDON (Commodity Online): Comex prices bounced back across the complex on Tuesday led by gains in Silver following the previous session of broad risk reduction. Equity markets edged higher, while the euro strengthened modestly against the dollar amid macro uncertainty. The failure of the Super Committee to reach an agreement on deficit reduction increases the probability that the payroll tax cut and unemployment benefits will expire at year-end, said Barclays Capital in a briefing.

Barclays economists’ baseline outlook is that these measures will be extended but failure to do so would likely reduce GDP growth in Q1 12 by about 1pp. Gold prices gained 1.1% to close at $1698.7/oz on Tuesday amid discussion of gold’s use as collateral for Eurobonds adding to its currency role.

 The latest weekly ECB statement revealed gold holdings across the euro system banks remained unchanged during the week ended 18 November as appetite for sales remains subdued.

Investor interest continues to grow in gold with physically backed ETPs up 9.3 tonnes on Tuesday and notably taking total metal held in trust to 2273.8 tonnes, a fresh record high, surpassing the peak set in early August. Flows for November have now reached 62.7 tonnes while flows for the year to date are at 131.8 tonnes.

Inflows are well below levels seen over the past six years, and only surpass the launch year of 2003 and 2004 but remain in positive territory; however, physical allocated bar exposure has continued to draw significant interest. Silver ETP holdings rose by 5 tonnes on Tuesday but remain negative for the month to date (-63 tonnes) as well as the year to date (-856 tonnes).

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