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Zimbabwe - Monthly Economic Review - January 2013
Gold and platinum prices declined signifi cantly during the month of December 2012. Gold prices dropped from USD 1,735 per ounce to USD 1,663 per ounce while platinum prices dropped from USD 1,585 per ounce to USD 1,549 per ounce (Table 1). The main likely cause of the decline in prices was the federal ‘fi scal cliff’ discussions in the United States of America (US), which were to take effect on 1 January 2013. The phrase was coined to describe the sharp budget defi cit decline – hence the ‘cliff’ – that could have occurred at the beginning of 2013 had the US Government allowed increased taxes and reduced spending prescribed by existing laws. Had the increased taxes and reduced spending come into effect, the US economy would have gone back into an offi cial recession, resulting in a cut in household incomes, increased unemployment rates and reduced consumer and investor confi dence. This debate possibly had a negative effect on commodity prices, particularly on the gold and platinum prices.