PRECIOUS-Gold rises on oil's gain, Middle East tensions

Thu Nov 15, 2012 2:33am IST

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* Geopolitical tension simmers after Israeli strike on Hamas
    * Markets digest Obama's update on "fiscal cliff"
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    By Frank Tang
    NEW YORK, Nov 14 (Reuters) - Gold prices rose on Wednesday
on crude oil's gains amid rising geopolitical tension in the
Middle East, and traders continued to focus on how the United
States can avoid a debilitating fiscal crisis at the end of the
year.
    News that Israel killed the military commander of the
Palestinian group Hamas in a missile strike on the Gaza Strip
triggered safe-haven demand, while scenes of violent
anti-austerity strikes in Spain and Italy prompted investors to
buy gold as a hedge against economic uncertainty.
 
    Bullion investors are digesting comments by President Barack
Obama to address the fiscal crisis. He said tax hikes on the
middle class could result in a recession if lawmakers fail to
agree on the tax and spending issues associated with the "fiscal
cliff" by year-end deadlines. 
    "Our short-term outlook continues to call for further gains
in gold, but we would not be surprised by a rather substantial
correction once a fiscal-cliff agreement is reached," said
Edward Meir, a metal analyst at futures brokerage INTL FCStone.
    The market largely ignored minutes from the latest Federal
policy meeting in October, which showed that a number of Fed
officials thought the U.S. central bank would need to step up
asset purchases next year to fill the gap when the Operation
Twist program expires. 
    Spot gold edged down 43 cents to $1,724.46 an ounce
by 3:09 PM EST (2009 GMT), pressured by a 1 percent drop on Wall
Street late in the session.
    U.S. COMEX gold futures for December delivery settled
up $5.30 at $1,730.10, with trading volume about 30 percent
below its 250-day average, preliminary Reuters data showed.
   A more than 1 percent gain in Brent crude futures 
after the Israeli air strike and higher grain prices lifted
gold. 
    The latest attacks marked the biggest escalation between
Israel and Gaza militants since a 2008-2009 conflict, and appear
to be pushing the two sides to the brink of a new war. 
    Gold prices had been pressured earlier after data showed
U.S. retail sales fell in October for the first time in three
months as Superstorm Sandy slammed the brakes on automobile
purchases, suggesting a loss of momentum in spending early in
the fourth quarter. 
    Silver rose 0.4 percent to $32.60 an ounce.
     
    U.S. FISCAL CRISIS REMAINS FOCUS
    The impending fiscal cliff preoccupied investors who
pondered how long Washington will take to reach a compromise and
avoid a series of mandated tax increases and spending cuts to be
triggered early next year that could send the world's largest
economy back into recession.
    Gold could fall if the metal underperforms the U.S. dollar
as a safe haven in a liquidity-driven risk event such as the
fiscal crisis, said Daniel Brebner, an analyst with Deutsche
Bank.
    Platinum group metals were higher for a second day, rallying
on a bullish forecast that production outages earlier this year
could result in a supply deficit. 
    Platinum climbed to $1,597.50, its strongest
performance since Oct. 23, and later was up 75 cents at
$1,581.50.
    Palladium hit a session high of $647.22, its
strongest since Oct. 18. It was last up 0.4 percent at $635.47
for the day.
 3:09 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1730.10   5.30   0.3  1720.50 1734.10  127,104
 US Silver DEC   32.88  0.393   1.2   32.365  32.930   39,926
 US Plat JAN   1591.60   5.20   0.3  1579.20 1603.30    7,354
 US Pall DEC    641.55   4.95   0.8   634.25  649.90    6,171
                                                               
 Gold          1724.46  -0.43   0.0  1721.18 1733.00         
 Silver         32.600  0.140   0.4   32.410  32.910
 Platinum      1581.50   0.75   0.0  1580.25 1597.50
 Palladium      635.47   2.75   0.4   635.50  647.22
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        137,878   149,890   177,286     15.43   -0.44
 US Silver       48,505    41,873    55,951     23.41   -0.97
 US Platinum      7,537     8,600     9,460     18.25   -0.75
 US Palladium     6,979     3,376     4,495
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