Comex December gold futures are little changed in early Monday New York trading. But, gold bulls are a persistent lot and the market keeps knocking at the door of key resistance at the top of the summer-long trading range.
This weekend's announcement in the U.S. regarding Republican presidential contender Mitt Romney's choice of running mate could have some potential implications for risk assets over the next several weeks to months. His vice presidential pick, Representative Paul Ryan, is a known hard-liner when it comes to fiscal issues. If the Romney/Ryan ticket pick up steam in the days or weeks ahead, this could increase market speculation that fiscal consolidation and cuts will be "front-loaded" quickly onto the economy with a Republican win in November.
That, in turn, could slow the U.S. economy as tax cuts and spending cuts are implemented early in a new administration, resulting in continuing slow growth or even the risk of recession in 2013. The U.S. Federal Reserve with its dual mandate to pursue price stability (think low inflation) and maximum employment would need to act according to its monetary policy mission.
Bottom line? Political policies that could slow growth are likely to be gold-bullish, as the Federal Reserve would need to keep its accommodative monetary policies in place, amid efforts to achieve its official mandates.
For now, gold traders need to keep a watchful eye on key near-term resistance levels.
The key level to watch on the upside for the December Comex contract remains the $1,633-$1,650 per ounce zone. If the bulls can muster enough strength to crash through that door, it will unleash the next wave higher in gold-market action. . .View Full Article
