SUPER COMMITTEE FAILS TO AGREE ON CUTS

by Goldline.com | November 21, 2011

Gold prices fell on the New York Spot Market on a stronger dollar and losses in global markets as fears over the global debt crisis were heightened. Some investors have liquidated gold positions to cover losses in other markets. Gold has perplexed some analysts in recent weeks as the metal has moved in tandem with riskier assets rather than behaving as a traditional safe-haven asset. "It's not behaving the way bulls would like it to behave," said Matthew Turner of Mitsubishi Corp. "There are enormous macro issues in Europe, the U.S. and China and we don't know how it will pan out. It's uncertainty on top of uncertainty, and a lot of people are standing on the sidelines." (Reuters, 11/21/11)

The lack of progress in solving the debt crisis in Europe and the failure of the U.S. super committee to agree on $1.2 trillion in cuts prompted a broad sell-off on Wall Street, with the Dow losing more than 300 points by afternoon trading. The super committee’s failure is fueling concern that Congress's failure to act could cause Moody's and Fitch to consider downgrading U.S. debt. "There's a real risk of further downgrades now," said Scott Clemons, chief investment strategist at Brown Brothers Harriman. "Moody's and Fitch could take this as an opportunity to say that S&P got this right." (CNN Money, 11/21/11)

†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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