PRECIOUS-Gold steady on Mideast tension, hopes for US fiscal talks

Tue Nov 20, 2012 12:51pm IST

* Moody's downgrade of France's rating weighs on risk
sentiment
    * Citi forecasts $1,749/oz for gold, $31 for silver in 2013
    * Spot gold may hover below $1,738/oz -technicals
    * Coming Up: Bank of Japan to announce policy meet outcome

 (Adds comments, details; updates prices)
    By Rujun Shen
    SINGAPORE, Nov 20 (Reuters) - Gold traded steady on Tuesday
following its biggest one-day rise in two weeks, supported by
hopes of a U.S. solution to its fiscal problems and Middle East
tension, but weighed down by a firmer dollar as a result of
France's rating downgrade.
    Financial market sentiment has improved in the past two days
after U.S. lawmakers expressed confidence that Congress could
reach a deal to avert automatic tax hikes and spending cuts in
early 2013, which could otherwise trigger another recession.
 
    Rating agency Moody's stripped France of its top-notch
rating, chilling the euro which had rallied to its highest in
nearly two weeks on Monday and pushing the dollar index 
slightly higher, weighing on buying interest in dollar-priced
commodities from investors holding other currencies.
  
    "People are feeling a bit at ease about the budget talks in
Congress," said Yuichi Ikemizu, head of Japan commodity trading
at Standard Bank.
    "But gold is in a tight range between $1,700 and $1,740
until we see a result of the talks at the year end, as the
'fiscal cliff' is the focus of the market."
    Spot gold was little changed at $1,732.59 an ounce by
0707 GMT, after rising more than 1 percent on Monday.
    U.S. gold traded nearly flat at $1,733.10.
    Technical analysis suggested spot gold may hover below a
resistance at $1,738 per ounce for one trading session before
breaking this level and rising into a target zone of
$1,746-$1,749, said Reuters market analyst Wang Tao.
 
    
    
 
    CITI SEES GOLD AT $1,749/OZ IN 2013
    Citi expected gold to rise to an average price of $1,749 an
ounce in 2013 from 2012's $1,679, peaking in the first quarter
at close to $1,800, as the improving U.S. economy and a stronger
dollar limit the upside, it said in a research note.
    "Gold may see another short-lived bounce in 1Q13 from
further Fed action to replace the ending OT2 (Operation Twist),
but signs of fatigue are increasingly apparent," the report
said.
    It forecast silver to average $31 next year, down from this
year's $31.30, and to further decline to $26.50 in 2014, as
demand picture is expected to remain slow while supply may
continue to rise.
    Spot silver barely changed at $33.13, after rising
2.5 percent in the previous session.
    Worries about Greece's debt crisis eased after Athens
approved laws to enforce budget targets and ensure privatisation
proceeds are used to pay off debt, seeking to appease foreign
lenders before a critical meeting of euro zone finance
ministers. 
    Some constructive economic data also helped support market
sentiment. U.S. home resales rose in October and a gauge of
homebuilder sentiment climbed to a six-year high in November.
 
    Tension in the Middle East is buoying safe-haven demand in
gold. Israel's leaders weighed the benefits and risks of sending
tanks and infantry into Gaza after six days of Palestinian
rocket fire and Israeli air strikes killed more than 100 people.
 
    Holdings of the gold-backed exchange-traded funds edged down
to 75.406 million ounces on Nov. 19, not far off last week's 
record high of 75.421 million. 
    
      Precious metals prices 0707 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1732.59    1.14   +0.07     10.79
  Spot Silver        33.13    0.03   +0.09     19.65
  Spot Platinum    1572.25    1.45   +0.09     12.87
  Spot Palladium    638.79    1.79   +0.28     -2.10
  COMEX GOLD DEC2  1733.10   -1.30   -0.07     10.61        11738
  COMEX SILVER DEC2  33.16   -0.03   -0.09     18.79         3926
  Euro/Dollar       1.2792
  Dollar/Yen         81.24
  COMEX gold and silver contracts show the most active months
 
 (Editing by Jonathan Thatcher)
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared
People walk in the Wipro campus in Bangalore June 23, 2009. REUTERS/Punit Paranjpe/Files

Wipro Q4 net profit beats estimates, rises 29 percent

Wipro posted a 29 percent rise in its fourth-quarter net profit, beating expectations, helped by increased IT spending by its customers. For the quarter ended March 31, the company said it earned 22.27 billion rupees compared with 17.29 billion rupees a year earlier.  Full Article | Full Coverage 

REUTERS SHOWCASE

Literary Giant Dies

Literary Giant Dies

Nobel winner Garcia Marquez, master of magical realism, dies at 87.  Read 

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Full Article | Full Coverage 

Insider Trading

Insider Trading

Ex-Goldman director Gupta starts prison term on June 17.  Full Article 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage