Gold price edges up as US debt ceiling talks progress

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Gold inched up on Monday, reversing losses from the previous session. (Reuters) Gold inched up on Monday, reversing losses from the previous session. (Reuters)
SummaryGold inched up on Monday, reversing losses from the previous session.

Gold inched up on Monday, reversing losses from the previous session on signs U.S. lawmakers were making progress towards an agreement on raising the country's borrowing limit to avoid a debt default.

FUNDAMENTALS

Spot gold rose 0.3 percent to $1,688.21 an ounce by 0043 GMT, after gaining 1.3 percent in the previous week.

U.S. gold was little changed at $1,688.30.

U.S. House Republican leaders on Friday said they would seek to pass a three-month extension of federal borrowing authority next week to buy time - on pain of losing their own paychecks - for the Democratic-controlled Senate to pass a budget plan that shrinks budget deficits.

U.S. Senate Democrats for the first time in more than three years will pass a budget, a senior Democratic lawmaker said on Sunday, fulfilling a basic task that Republicans have been urging them to do.

U.S. consumer sentiment unexpectedly deteriorated for a second straight month to its lowest in over a year in January, with many consumers citing fallout from the recent "fiscal cliff" debate in Washington, a survey released on Friday showed.

Italy's central bank cut its forecast for the country's shrinking economy on Friday, as tight credit conditions and a gloomy international backdrop darken the domestic outlook before a national election in February.

Speculators raised their net long positions in U.S. gold futures and options by 8 percent on the week to 99,458 contracts in the week ended Jan. 15, said U.S. Commodity Futures Trading Commision. Net length in silver also increased.

MARKET NEWS

The Dow and S&P 500 closed at five-year highs on Friday as the market registered a third straight week of gains on a solid start to the quarterly earnings season.

The yen sank to a fresh 2-1/2 year low against the greenback on Monday with investors giving the currency a wide berth in the lead up to a Bank of Japan meeting that could see the central bank commit to aggressive reflationary policy.

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