Gold recovered in an impressive manner today but the rally was cut short by a rather depressive movement in global stocks as traders looked past the fiscal deal and strength in US dollar limited gains for commodities. The commodity had dropped heavily in last week, falling to a fresh four month low under $1630 per ounce but recovered on Friday after the US non farm payrolls data. The metal jumped above $1660 per ounce today and currently trades at $1656.60, up $7.70 per ounce on the day. Equities mostly slipped on profit selling after recent gains. The IMF has recently noted that the US could drag the global economy back into recession without a budget deal, said: We welcome the action by the US Congress to avoid sudden tax increases and spending cuts, including through an extension of unemployment benefits during 2013. In the absence of congressional action the economic recovery would have been derailed, according to the fund.While the US fiscal cliff debate has been put to bed, policymakers in the world's largest economy must now turn their attention to addressing the debt ceiling. The debt ceiling refers to the amount of debt the U.S. can carry at any given time and if it is not raised, riskier assets could be punished as another downgrade to the U.S. credit rating becomes probable. There is a possibility that after the contentious fiscal cliff debate, markets may be anticipating more of the same when it comes to the debt ceiling. Congressional Republicans have already signaled they will not move forward with a debt ceiling plan unless they secure a commitment from President Obama to significantly reduce government spending.Meanwhile, the local futures were seen benefiting from the weak undertone in the Indian rupee and managed to break above Rs 31000 per 10 grams in intraday moves. Rupee fell to an over one-month low on Monday, extending its losing streak to a third session, dragged down by steady dollar demand from oil refiners and a fall in local stocks. The currency shed more than 20 paise to end the day at 55.23 against the US dollar in local spot markets. The MCX February contract is quoting at Rs 31020, up Rs 113 or 0.37% on the day with 2.49% increase in the open interest.
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