Gold edges down as US fiscal talk uncertainty weighs

Dec 04 2012, 09:58 IST
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Gold edged lower on Tuesday as the uncertainty about the U.S. budget talks kept investors on the edge. (Reuters) Gold edged lower on Tuesday as the uncertainty about the U.S. budget talks kept investors on the edge. (Reuters)
SummaryGold edged lower on Tuesday as the uncertainty about the U.S. budget talks kept investors on the edge.

Gold edged lower on Tuesday as the uncertainty about the U.S. budget talks kept investors on the edge, offsetting positive news from debt-laden Europe that helped keep the euro steady near its highest level in more than one month.

Republicans and the White House have made little progress in their negotiation to avert the automatic kick-off of $600 billion tax hikes and spending cuts early next year, dubbed as the "fiscal cliff", which could push the world's top economy into recession.

The stalemate in the negotiation made investors reluctant to jump in to the market, despite support from currencies. A softer dollar makes commodities priced in the greenback cheaper for holders of other currencies.

"Gold is still under pressure despite the support from currency market," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

"The physical market is quiet, there is some profit-taking, and we don't see fresh buying interest from the funds."

Spot gold inched down 0.2 percent to $1,712.14 an ounce by 0303 GMT. U.S. gold lost half a percent to $1,712.50.

Technical analysis suggested that spot gold is poised to break a support at $1,707 an ounce and fall to $1,692 during the day, said Reuters market analyst Wang Tao.

The euro held just below its highest level since Oct. 22 hit in the previous session while the dollar index hovered above a one-month low, after upbeat news from Greece and Spain together with disappointing U.S. data.

CAR SALES DATA SUPPORT PLATINUM GROUP METALS

Upbeat car sales data have recently helped support platinum group metals, which are used widely in producing exhaust-reducing catalysts.

U.S. auto sales in November raced to a five-year high for that month on a rebound from storm-ravaged October and the need to replace aging vehicles, leaving industry executives hopeful about 2013.

Last week, China's Ministry of Industry and Information Technology said the country's car sales and output will both exceed 19 million units this year.

In the first 10 months of the year, total vehicle sales gained 3.6 percent on the year to 15.7 units.

Spot palladium lost 0.6 percent to $681.80, easing from $689.5 -- its highest level since mid-September hit in the previous session.

Spot platinum inched down 0.3 percent to $1,596.50.

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