Gold seesawing at the tip of the fiscal cliff

Its been called the icking time bomb by many, but for gold investors, the fiscal cliff is also a landmine of anticipation.
Analysts are debating over whether the precious metal will tip towards the bearish end or the bullish end if the US goes over the fiscal cliff.
Those in the bull camp argue that the safe haven appeal of gold will become the key motivator if the US goes over the fiscal cliff, making investors revert to the precious metal to hedge their risk.
What is believed to drive this bullish sentiment is the fact that if the country dives over the fiscal cliff, a lot of uncertainty in markets will ensue. And uncertainty appears to be a close friend of gold.
At the same time, because the US is largely believed to plunge into a recession if the spending cuts and tax increases come into effect, the greenback will also likely lose some strength. And what does that mean? That golds luster will increase more in comparison.
At the other end, those in the bear camp believe that if no resolution about the fiscal cliff is reached and the economy rolls over it, the consequent recessionary impact will take a toll on all markets, and gold will also go down with other assets.
"As a rule of thumb, you would likely see everybody from financial institutions to real money managers probably take larger cash positions than otherwise. That implies selling assets, and gold would certainly behave like a risk asset then," Bart Melek, head of commodity strategy for TD Securities - a Toronto-based Capital Markets firm, was quoted by the Forbes magazine last week.
However, those in the bull camp outnumber those in the bear camp. Further, EuroInvestor, an internet media company, providing investment information claims that investors have upped their purchase of gold coins due to the uncertainty about the fiscal cliff.
Thats understandable given the anticipation about the outcome of deals on the fiscal cliff. Whats more important is how this ticking time bomb will be resolved. If no deals reached and the economy goes over the cliff, gold followers should likely brace for a bull run thanks to the ensuing uncertainty. But if a reasonable deal is reached, gold prices may be brought down.