PRECIOUS-Gold firms on soft dollar; US fiscal talks eyed

Mon Nov 19, 2012 1:17pm IST

* Hopes on U.S. "fiscal cliff" talks buoy sentiment
    * Gold ETF holdings hit record
    * Spot gold targets $1,734-$1,738/oz -technicals
    * Coming Up: U.S. existing home sales, Oct; 1500 GMT

 (Adds comments; updates prices)
    By Rujun Shen
    SINGAPORE, Nov 19 (Reuters) - Gold gained on Monday after
dropping by 1 percent last week as the dollar came off the
previous session's highs, while rising tension in the Middle
East and continued U.S. discussions to resolve fiscal
difficulties lent support.
    Hope that U.S. politicians would find common ground to steer
clear of the fiscal cliff boosted Asian shares on Monday. The
dollar index eased from a two-month high hit on Friday,
making commodities priced in the greenback more affordable for
buyers holding other currencies. 
   
    "The dollar is losing momentum for a further rally after
Friday's positive news on the fiscal talks, which will support
gold," said Li Ning, an analyst at Shanghai CIFCO Futures.
    The discussions between the two parties are unlikely go
smoothly, which would potentially benefit gold, a traditional
safe haven favoured by investors during political and economic
uncertainty, she said.
    While last week's report from the World Gold Council painted
a lacklustre picture of global gold consumption, investment will
continue to underpin prices, Li added. 
    Spot gold rose 0.6 percent to $1,723.10 an ounce by
0735 GMT. U.S. gold gained half a percent to $1,723.10.
    "If we go through the resistance at $1,726, we should see
some short-covering and again test the 50-moving average this
week," said a Singapore-based trader. The 50-day moving average
stood at $1,741.
    Reuters market analyst Wang Tao expected spot gold to rise
to a resistance zone of $1,734 to $1,738 an ounce during the
day,  driven by an upward wave c. 
    Spot silver rose 1.2 percent to $32.59, on course for
its biggest daily rise in a week and half. 
    
    
    
    INVESTMENT DEMAND UP; ETF HOLDINGS AT RECORD    
    Holdings of gold-backed exchange-traded funds rose to a
record high of 75.421 million ounces on Nov. 16, suggesting
unabated investment interest. 
    Speculators raised their net long bets in U.S. gold in the
week ended Nov. 13 from the lowest level in about three months
hit a week earlier, the U.S. Commodity Futures Trading
Commission said. 
    Net long positions in U.S. silver edged up to 27,802
contracts from 27,350 contracts a week earlier, their lowest
since late August. 
    But Asia's physical market was sluggish as buyers shied
away, with prices settling back into a range-trade mode.
    "We see some fund buying interest and some stop-loss buying
after prices broke above $1,720, but the physical demand is
very, very slow," said Peter Fung, head of dealing at Wing Fung
Precious Metals in Hong Kong.
    

   Precious metals prices 0735 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1723.10    9.61   +0.56     10.19
  Spot Silver        32.59    0.38   +1.18     17.70
  Spot Platinum    1563.49    9.49   +0.61     12.24
  Spot Palladium    630.47    3.47   +0.55     -3.38
  COMEX GOLD DEC2  1723.10    8.40   +0.49      9.98        19447
  COMEX SILVER DEC2  32.62    0.25   +0.76     16.84         7207
  Euro/Dollar       1.2767
  Dollar/Yen         81.28
  COMEX gold and silver contracts show the most active months 
    

 (Editing by Clarence Fernandez)

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