PRECIOUS-Gold edges up, holds near 3-week high on US fiscal woes

Mon Nov 12, 2012 12:50pm IST

* Gold to end rebound around $1,748 
    * Shanghai Gold Exchange eyes interbank mkt launch next
month
    * China says no timeframe on giving out more gold import
licenses

 (Updates prices, adds Obama's meeting this week, Implat's
forecast)
    By Lewa Pardomuan
    SINGAPORE, Nov 12 (Reuters) - Gold edged up on Monday, after
posting its biggest weekly gain since late August, on safe-haven
buying driven by worries the United States could return to
recession if Congress fails to reach a deficit-reduction deal.
    President Barack Obama will meet business, labour and civic
leaders this week ahead of negotiations with top lawmakers to
avert sharp tax hikes and deep spending cuts that loom at the
end of the year, a White House official said late on Sunday.
  
    Gold added $3.19 an ounce to $1,734.10 by 0657 GMT,
holding near a 3-week high around $1,738 struck on Friday and
hovering well above a 2-month low around $1,672 hit last week.
    "Worries about the fiscal cliff continue to drive sentiment.
Obama will speak on Wednesday on the matter, and we are seeing
some signs of compromise between Democrats and Republicans,"
said Nick Trevethan, senior metals strategist at ANZ in
Singapore.
    "That may take some of the steam out of the upside story for
gold, but the prospect of negative real interest rates and
longer-term inflationary risks remain positives for bullion." 
    Uncertainty over U.S. fiscal woes weighed on shares in Asia
but euro held above a two-month low after Greece's ruling
coalition secured enough votes in parliament to approve the 2013
budget law. A rebound in the euro makes dollar-priced gold less
expensive.  
    "We continue to see upside potential in this market with
$1,750 the next target," said Trevethan.
    "Above there, gold is likely to struggle with very heavy
resistance at $1,790-$1,800, and we do not expect the market to
break above those levels on a sustained level until next year."
    U.S. gold for December rose $3.60 an ounce to 
$1,734.50.     
    
    At the London Bullion Market Association (LBMA) conference
in Hong Kong, president of the Shanghai Gold Exchange told
Reuters the bourse will launch an interbank market early next
month that will start with spot contracts and gradually offer
forward contracts. 
    Also at the same conference, general director of the
People's Bank of China, Xie Duo, said the central bank has not
set a time frame on issuing more gold import licenses to banks,
but is keen to further open up the market to the international
community. 
    Last week, the global head of metals at consultancy Thomson
Reuters GFMS said he expected China's gold demand to grow 1
percent this year to a record of around 860 tonnes, which means
the country will overtake India as the world's biggest consumer
of gold for the first time on a yearly basis. 
    Other precious metals were also higher, with platinum 
rising $11.31 to $1,561.30 an ounce.   
     Impala Platinum Holdings Limited, the world's No.2
platinum producer, expects the market for the precious metal
with industrial uses to be in deficit for 2012 and the next few
years. 
    "We think the market is in fact moving into deficit this
year, based on a significant decline in South African supply and
a small reduction of jewellery being recycled because of lower
prices," Derek Engelbrecht, Impala group executive for
marketing, told the LBMA conference in Hong Kong.
    Platinum prices have eased about 6 percent so far this
month.
    In the physical gold market, jewellery makers retreated,
while speculators and investors waited for bullion prices to
rise again before cashing in. Premiums in Hong Kong were steady
at between 60 cents to $1.10 to the spot London prices.
    "Jewellery makers may have to wait before they come back to
buy again. I guess people are digesting the rebound in prices. A
rise to $1,780 may attract selling from speculators," a dealer
in Hong Kong said.
    In India, gold importers paused on fresh purchases on Friday
as a weaker rupee helped the metal hit its highest level in
seven weeks. The festive season in India will peak with
Dhanteras and Diwali this week, while the wedding season
continues until December. 
     Gold jewellery forms a key part of gifts in weddings and
festivals in India. 
  
  Precious metals prices 0657 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1734.10    3.19   +0.18     10.89
  Spot Silver        32.67    0.09   +0.28     17.98
  Spot Platinum    1561.30   11.31   +0.73     12.08
  Spot Palladium    607.30    3.38   +0.56     -6.93
  COMEX GOLD DEC2  1734.50    3.60   +0.21     10.70        13318
  COMEX SILVER DEC2  32.69    0.09   +0.26     17.09         5029
  Euro/Dollar       1.2728
  Dollar/Yen         79.48
 
  COMEX gold and silver contracts show the most active months
 

 (Editing by Himani Sarkar)
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