Precious Metals, XAU Climb, Fiscal Cliff Deal “In Sight”

Precious metals maintained the large majority of their gains Monday afternoon amid a broad-based rally on Wall Street. Commodities and stocks surged higher amid reports that Congress and the Obama administration were nearing the completion of a deal to resolve the looming fiscal cliff.

The proposed budget deal, according to Senate Minority leader Mitch McConnell, would include tax increases for individuals with incomes above $400,000 and families making more than $450,000.  President Obama stated this afternoon that an agreement is “within sight,” and would prevent a tax hike for the large majority of Americans, extend unemployment benefits for up to two million people, and extend the child tax and tuition credits for families.

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As for the markets, COMEX gold futures closed higher by $19.90, or 1.2%, at $1,675.80 per ounce while COMEX silver futures advanced by 0.8% at $30.23 per ounce.  In doing so, the most actively-traded futures contracts for gold and silver posted gains in 2012 of 7.0% and 8.3%, respectively.

Gold and silver stocks rose sharply, with the Philadelphia Gold & Silver Index (XAU) up by 3.2% at 165.74 in afternoon trading.  Nevertheless, the XAU remained on track to post a year-to-date decline of 8.2%.

Precious metals were undeterred by firmness in the U.S. dollar, which clung to a small gain against a composite of foreign currencies in today’s trading session.

(Price targets, rankings, upgrades and downgrades on every XAU component at GoldAlert Pro – http://pro.goldalert.com)

Notable gold and silver stocks in the black on Monday included Barrick Gold (ABX), Kinross Gold (KGC), and Silver Wheaton (SLW).  Shares of ABX jumped by 3.2% to $35.11, KGC by 3.5% to $9.74, and SLW by 4.3% to $36.14.

The broader equity markets fared quite well this afternoon, but still lagged most precious metals shares in today’s session.  The S&P 500 Index rose by 1.3% to 1,420.54, putting it on pace for a 13.0% annual advance.