$15 Trillion US National Debt ‘Supercommittee’ Impasse To Support Gold
Gold is lower in all currencies today except Australian dollars and is down another 1% in USD and 0.5% in EUR.
Last week’s 3.5% fall (in USD) created negative short term technicals. Support is at the $1,700 and $1,680 mark. The 144 day moving average is at $1,652 and a further correction of just 3% could result in gold again testing and finding support at this level.
Equities in Asia and Europe have fallen and headline risk is to the downside. The crisis in Europe is unlikely to improve in the short term and the US cross-party ‘supercommittee’ established to negotiate budgetary savings seems destined to miss the deadline for reaching agreement.
Financial contagion in Europe is pushing already fragile global economies towards recessions, and the risk of slipping into global recession are rising significantly. Indeed, as we have warned for many months, there is a real risk of a global Depression given the scale of the debt levels in most western countries and the massive imbalances globally.
A senior Chinese official, Chinese Vice Premier Wang, said yesterday that a ‘chronic’ long term global recession is certain to happen and China must focus on domestic problems.
While all the focus has been on Europe in recent weeks, markets may again focus on the not inconsequential matter of the appalling US fiscal position which could see further market volatility and the dollar come under pressure again.
Washington’s latest fractious effort to come to grips with its mounting debt looks set to end in failure today as negotiators look set to announce they have failed to reach a deal. The Congressional ‘supercommittee ‘charged with cutting the US government’s crushing $15 trillion debt looks set to admit failure which should support gold.