Gold eases; eyes on Greek debt, U.S. fiscal woes

LONDON Wed Nov 21, 2012 9:08pm IST

Muslim pilgrims reflected at glass of a jewellery shop at the surrounding area of the Grand Mosque during the annual hajj pilgrimage in the holy city of Mecca October 20, 2012. REUTERS/Amr Abdallah Dalsh/Files

Muslim pilgrims reflected at glass of a jewellery shop at the surrounding area of the Grand Mosque during the annual hajj pilgrimage in the holy city of Mecca October 20, 2012.

Credit: Reuters/Amr Abdallah Dalsh/Files

Related Topics

Stocks

   
Kishore Pandey, 82, lies on a bed as his daughter, Usha Tiwari, holds him and a priest stands by them (L) at Mukti Bhavan (Salvation House) in Varanasi, in the northern Indian state of Uttar Pradesh, June 19, 2014. REUTERS/Danish Siddiqui

Waiting to die at Salvation House

The city of Varanasi is Hinduism's holiest city and many Hindus believe that dying there and having their remains scattered in the Ganges allows their soul to escape a cycle of death and rebirth.  Slideshow 

LONDON (Reuters) - Gold edged lower, trading at around $1,724 an ounce on Wednesday, with investors focused on efforts to agree financial aid for Greece, truce talks over Gaza and discussions on how to avert a fiscal crisis in the United States.

Spot gold slipped 0.25 percent to $1,723.71 an ounce by 1506 GMT. U.S. gold was up 0.03 percent at $1,724.10.

Gold prices had eased as the dollar firmed after Greece's lenders failed to strike a debt deal for the country, and later failed to react to U.S. jobless claims data, which came in as expected.

International lenders failed for the second week to reach a deal to release emergency aid for Greece and will try again next Monday, but Germany signalled that significant divisions remain.

"Gold is continuing to consolidate in its current range between $1,720 and $1,735-1,736. Buying would come in if gold goes below $1,720," Alexander Zumpfe, a trader at precious metals house Heraeus, said.

Losses in bullion were checked by expectations that U.S. lawmakers would reach a deal to avert automatic tax hikes and spending cuts in early 2013, which could otherwise trigger another recession.

"This optimism is about avoiding recession, which would weigh on gold prices because of concerns over deflation," said Bayram Dincer, analyst with LGT Capital Management.

Federal Reserve Chairman Ben Bernanke said on Tuesday that 2013 could be a "very good year" for the U.S. economy if politicians can strike a quick deal to avoid the so-called fiscal cliff.

The conflict in the Middle East helped to support the gold price. A failure to reach a cease-fire would further support gold's safe-haven appeal, analysts said.

Gold can sometimes be viewed as a safe haven investment, especially in times of great uncertainty.

U.S. Secretary of State Hillary Clinton on Wednesday pursued a Gaza truce, with Israel and Hamas still at odds over terms, as Israeli air strikes shook the enclave and a bomb exploded on a Tel Aviv bus.

CENTRAL BANK GOLD RESERVES

News that Brazil, Kazakhstan and Turkey had raised their gold holdings also supported gold prices.

Brazil raised its gold holdings by 17.170 tonnes in October, data from the International Monetary Fund showed on Wednesday, bringing its bullion reserves to 52.518 tonnes.

"This is a chunky purchase by a central bank, and the gold market will likely sit up and pay attention to today's news, not just because of its size but because this is a central bank that has not been active in the market for some time," UBS said in a note to clients.

Traders and analysts expect gold to remain rangebound as some traders unwind long positions before Thanksgiving, but say the longer-term outlook for gold remains positive due to expectations of a continuing ultra-loose monetary environment in the United States.

Spot silver eased 0.48 percent to $33.00 an ounce.

Platinum edged up 0.13 percent to $1,571.25, while palladium was last at $638.5, up 0.83 percent.

(Editing by Veronica Brown and Jason Neely)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-Nepal Ties

REUTERS SHOWCASE

Tackling Food Prices

Tackling Food Prices

India to free up extra 10 million tonne wheat in open market  Full Article 

Facebook Results

Facebook Results

Facebook beats Wall Street targets, stock hits record high  Full Article 

GM Recall

GM Recall

GM recalls 717,950 vehicles in U.S., not for ignition switches  Full Article 

Hyundai Motor Results

Hyundai Motor Results

Hyundai Motor Q2 profit slips as firmer won, U.S. discounts hurt  Full Article 

Nokia Results

Nokia Results

Nokia raises networks outlook after Q2 profit beats estimates  Full Article 

Factory Sector

Factory Sector

China July HSBC flash PMI at 18-month high of 52.0   Full Article 

Breakingviews

Breakingviews

Apple winds up earnings hope for new gadgets  Full Article 

Reuters India Mobile

Reuters India Mobile

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