Gold edges up, but US fiscal talks drag
Hedge funds and money managers slashed their net long gold positions in the week to Dec. 18 to their lowest level since the end of August, according to the Commodity Futures Trading Commission's Commitments of Traders report on Friday.
Despite the recent losses, gold remains set 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.
Gold added 72 cents to $1,656.81 an ounce, having fallen to its weakest since August at $1,635.09 last week.
Bullion, traditionally an inflation hedge, hit a record around $1,920 in September 2011 when a worsening debt crisis in Europe sparked a buying rush.
"We are expecting thin trading volumes due to the festivities and because of this, gold is prone to volatility. I don't to expect any surprises. I believe gold should hold above $1,625," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore.
"It's unlikely that we will see any resolution on the fiscal cliff before the end of the year as the Republicans and the Democrats have differences to iron out. I don't think it can be solved within these few days."
Some U.S. lawmakers voiced concern on Sunday the country would go over
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