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Gold Prices Jump on 'Fiscal Cliff' Deal (Update 1)

Updated from 12:22 p.m. EST with settlement prices

NEW YORK ( TheStreet) -- Gold prices jumped Wednesday on the news that Congress had passed a bill to successfully keep the nation from going over the so-called fiscal cliff.

Gold for February delivery added $13 to settle at $1,688.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,695.40 and as low as $1,670.90 an ounce, while the spot price was tacking on $11.80, according to Kitco's gold index.

"Prices are heading north on the fiscal cliff solution and due to general basics investors again examine for the new year," George Gero, precious metals strategist at RBC Wealth Management, wrote in a note.

Silver prices for March delivery climbed 78 cents to close at $31.01 an ounce, while the U.S. dollar index was up 0.21% to $79.93.

The U.S. Senate first passed the bill in the early hours on Tuesday by a vote of 89-8, before the House took up the legislation later that evening to pass the measure by 257 - 167. President Barack Obama emerged at about 11:20 p.m. EST to confirm he would sign the deal into law, and then he walked directly to Marine One to begin his trek to Honolulu, Hawaii, to resume his vacation there.

Gold climbed gradually higher after news of the successful fiscal cliff deal.

Some analysts saw an agreement to avoid the automatic deep spending cuts and tax hikes as a positive for the yellow metal.

"I think that what this is going to turn out to be is ultimately another round of [quantitative easing] or stimulus, just in a different form," Tom Power, senior commodities broker at RJO Futures, said in an interview on Monday.

On the economic front, the Institute for Supply Management said Wednesday that the ISM Manufacturing Index printed at 50.7 in December, which was up from November's 49.5 reading. Any number at 50 or higher suggests growth in the sector, whereas a reading below 50 means the sector is in contraction. Economists had expected December's report to increase to 50.3.

The Federal Open Market Committee -- the policy-writing wing of the Federal Reserve -- was expected on Wednesday to release the minutes of its latest meeting.
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