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She expects gold prices to touch Rs.33000 levels though she did not say when as “the price activity would be governed by government actions on either side of the Atlantic.”. She expects MCX Silver to touch..

28 Dec 2012

By Rakesh Neelakandan
Renisha Chainani, Manager-Research, Edelweiss thinks that once a fiscal cliff deal is possible, gold and silver prices could bounce back next year.

She expects gold prices to touch Rs.33000 levels though she did not say when as “the price activity would be governed by government actions on either side of the Atlantic.”. She expects MCX Silver to touch Rs.65000 levels. She thinks that possibilities exist for Comex silver to climb to $40.

Meanwhile, Manoj Kumar Jain of India Nivesh has retained his contrarian view on bullion:

“ I am bearish on gold for the next two months” said Manoj Kumar Jain, President, Commodity & Forex Business; India Nivesh Commodities recently.

However, at least by mid-January, he expects prices of copper to appreciate. Rs.428 could be a good stop loss, he said.

“And if the commodity closes above Rs.452-454 on a weekly basis, where there is a major resistance, next stop could be at Rs.480-490.” he added.

He too expects a comprehensive solution to the you-know-what-issue by mid-January.

Change of name

There is a new name for the fiscal cliff issue: you-know-what-issue. So much for the reams of paper and web pages written on this subject; the word fiscal cliff issue has almost become a cliché for journalists, rivalled only by perhaps, the word 'Eurozone crisis'.

Still the Himalayan issue remains a Himalayan issue! The elephant is still in the room. And one can count the days left for a descent to Armageddon in fingers: 4 days.

Cometh January 1 and you will see $600 billion in spending cuts and tax hikes kicking in and in turn ushering in a recession, experts say.

Going by the events as they unfold, Kunal Shah of Nirmal Bang is confident that some solution, thought it may sometimes be a patch-work solution would be arrived at in case of you-know-what-issue.

“ I am optimistic and confident that the chamber meeting announced for Sunday would come out with a solution.” he said. “Possibilities exist that the differences would still be there, but going by the way they have clinched deals before, especially the last-minute deal that followed the debt-ceiling debate, some or the other solution is possible.” he added.

Obama is about to meet House Speaker John A. Boehner(Ohio Republican), Senate Majority Leader Harry Reid (Nevada Democrat.), Senate Minority Leader Mitch McConnell (Kentucky Republican.) and House Minority Leader Nancy Pelosi San Francisco Democrat) in the presence of Joe Biden, Vice President of US. Meanwhile House Majority Leader Eric Cantor said the chamber is scheduled to meet on December 30 for its first Sunday session in more than two years.

The optimism is well reflected by the crude oil markets.

“Suddenly, the world is abuzz with the word growth. There are some hectic activities underway in revising GDP figures.” he said. “This is well reflected by the crude oil prices.” he said.

The prequel deal

Obama had called on the Congress to extend the tax cuts of Bush-era on American households earning below the threshold of $250,000 and suspend the spending cuts: many believe that the spending cuts can make US much more vulnerable to security threats.

A typical American household earns $50,000 a year. If the automated tax hikes (along with spending cuts) are initiated, 2% pay roll tax cuts would be terminated overnight. Some 125 million households earning $50,000 a year would see pay being cut at least by $1000. This would be prevented, if the sense of Congress wills it.

Alternative Minimum Tax issue should also be addressed as per Obama, “so that the tax filing season can proceed without the administrative nightmare of retroactive adjustment.” NYT said.

Some 28 million US people earning between $100,000 and $500,000 a year will have to pay the alternative minimum tax in 2013 for the period of 2012. (The tax was actually targeted at multimillionaires who in turn outmaneuvered the system and managed to stay away from the ambit of tax). The 28 million have pegged their hopes on Congress exempting “them from the tax that they were never intended to pay.”; New York Times pitied.

Now, all these factors are expected to be woven into the patch-work solution.


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