Gold edges down, US fiscal talks in focus

Dec 27 2012, 10:34 IST
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US gold for February slipped $2.40 to $1,658.30 an ounce.  (Reuters) US gold for February slipped $2.40 to $1,658.30 an ounce. (Reuters)
SummaryUS gold for February slipped $2.40 to $1,658.30 an ounce.

Gold inched down in thin trade on Thursday, with investors keeping a close eye on talks between the White House and Congress to prevent the U.S. economy from plunging into recession next year.

Republican House of Representatives Speaker John Boehner urged the Democrat- controlled Senate to act to pull back from the so-called fiscal cliff and offered to at least consider any bill the upper chamber produced, raising hopes there may be a way through deadlock in Congress.

Gold fell $2.13 an ounce to $1,657.36 by 0303 GMT. It has come off a 4-month low struck last week, but remains below a record high of around $1,920 hit in September 2011.

The United States faces $109 billion in across-the-board spending cuts starting in January unless a deal is reached to either replace or delay them. Democrats want to switch the spending cuts to tax increases for the most part.

"Most investors are definitely not hoping for the worse as they don't only hold precious metals in their investment portfolio. So of course they are hoping the talks will come through," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore.

"But it doesn't bode well for (precious) metals if the talks come through. However it will only be temporary as we foresee that metals will still continue to shine. In 2013, we are expecting precious metals to close the year higher compared to the price level we see today."

A failure in the fiscal talks could spur safe-haven buying, boosting gold.

For the year, bullion is up around 6 percent, on track for a 12th straight year of gains on rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks.

U.S. gold for February slipped $2.40 to $1,658.30 an ounce.

Shares were little changed in Asia on Thursday on investor edginess about the chances of U.S. lawmakers striking a deal to avoid a fiscal crunch by Dec. 31, while the yen stayed under pressure on the prospect of drastic monetary easing and massive fiscal spending.

Investors also await the release of U.S. weekly jobless claims data due at 1330 GMT. Economists in a Reuters survey forecast a total of 360,000 new filings compared with 361,000 in the prior week.

A weaker yen lifted gold contracts on Tokyo Commodity Exchange but

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