Spot gold ended the day in New York at $1,689.25 an ounce, after hitting a two and a half week high today. The precious metal’s climb was tempered later in the day as the dollar recovered from overnight losses to move into positive territory, which usually a drag on gold.
Last night’s deal in Washington pushed back the hard part of the fiscal cliff – the $106 billion in across the board spending cuts that were set to begin taking effect this week. Those spending cuts were delayed for two months, making them a problem the new Congress will have to tackle, along with the debt ceiling (which was technically breached this week.)
This sets up a replay of the 2011 debt ceiling impasse that caused the U.S. debt to be downgraded, costing the government billions of dollars more in interest payments. That 2011 budget battle was also the genesis of the fiscal cliff spending cuts, an effort to start fiscal reform in Washington.