U.S. vulnerability to 'Fiscal Cliff' dampens mood

Stocks and commodities are grappling with renewed concerns about the outlook for the U.S. economy amid ongoing squabbling in Washington over the fiscal cliff.

Trading is now quite confused, with no clear 'risk' or 'risk off' trend. Copper and oil are falling in price. Gold is also quite upset in this regard. At one point, it has fallen below $1,700 per troy ounce after previous support levels were breached. This led to a flurry of sales. The precious metal has recovered somewhat and is trading above $1,700 per troy ounce of gold again. Analysts base the uncertainty on, among other things, the concern about the 'fiscal cliff'.

These concerns have been heightened by the White House's rejection of the Republicans' proposal on Monday on tax reform and spending cuts. These plans do not provide for President Obama's policy on taxing the wealthiest Americans.

Last Thursday, the Republicans rejected the Democrats' proposal. Both sides hold each other responsible for the fact that there is no agreement to avert the 'fiscal cliff'. There is less than a month left to reach an agreement. It also seems more and more likely that a short-term solution will be found. If an agreement can still be reached within 2 weeks, this could be a strong impulse for the stock markets, among others. However, this scenario no longer seems plausible.

Source: ft.com