PRECIOUS-Gold up in thin post-Christmas trade;US budget in focus

Thu Dec 27, 2012 1:29am IST

* Futures contract for Feb ends up $1.20 at $1,660.70/oz

* Spot gold holds near $1,660

* London markets closed for Boxing Day holiday (Recasts, updates prices to close of US futures session)

By Barani Krishnan

NEW YORK, Dec 26 (Reuters) - Gold edged higher on Wednesday as thin post-Christmas trading and anticipation that a U.S. budget deal might be done before the end of the year supported bullion prices.

Trading across commodities was light, curtailed by London's Boxing Day holiday and year-end festivities elsewhere. U.S. crude oil outperformed other markets, rising 3 percent to a 6-week high, on technical buying, Middle East tensions and signs of speedier efforts to avert the U.S. fiscal crisis.

In gold futures, the benchmark February contract on New York's COMEX settled up $1.20 at $1,660.70 an ounce after a session high at $1,668.70.

Bullion's spot price hovered near $1,660, versus late Monday's level of around $1,658.

"Markets are thin, so few large orders can move prices quickly this week," said George Gero, precious metals analyst at RBC Capital Markets Global Futures, in New York.

He said renewed efforts by the Obama administration to avert a fiscal crisis before the end of the year represented one of the positive factors for gold in Wednesday's session.

President Barack Obama cut short his Christmas holiday in Hawaii to return to Washington early on Thursday to resume budget talks with the Republicans, in an effort to prevent some $600 billion in automatic tax hikes and spending cuts from kicking in next year. In January, the president, a Democrat, will be sworn in to serve his second four-year term in office.

While gold is typically a safe-haven asset that gets a boost from economic uncertainties, it has increasingly been behaving like a risk asset, and could also gain if a U.S. resolution comes through.

Some traders envisioned bullion staying at around current levels till the year-end, moving between $30 and $40 either way.

"I am still friendly with the market, but it looks like until the new year starts, it's under pressure from probably long liquidation," said Yuichi Ikemizu, branch manager at Standard Bank in Tokyo, citing the U.S. budget talks as one of the main things on the market's agenda.

"This week, probably we will stay around here at $1,640 to $1,670."

Gold contracts on the Tokyo Commodity Exchange, which often influence movements in spot gold, rose after the yen dropped to a 20-month low against the dollar on growing hopes for further monetary easing in Japan. <0#JAU:>

Gold demand in India, the world's biggest buyer of the precious metal, rose as prices eased following a drop in the world market and on a firm rupee. The actively traded gold contract for February delivery on the Multi Commodity Exchange (MCX) was 0.48 percent lower at 30,705 rupees ($560) per 10 grams as of 0951 GMT.

Gold dealers said there was also buying interest from bargain hunters and jewelers in other parts of Southeast Asia.

"We don't have enough stocks because of the Christmas holiday, so supply is a bit tight," said a physical dealer in Singapore, who noted light buying from Indonesia and Thailand. (Reporting by Barani Krishnan; Editing by Jan Paschal)

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

  • Most Popular
  • Most Shared

Pharma

REUTERS SHOWCASE

Jan Dhan Yojna

Jan Dhan Yojna

Modi: Banking for all to end "financial untouchability".  Full Article 

Power Outage

Power Outage

India may face blackouts as coal shortage cuts power output  Full Article 

Moody's on Inflation

Moody's on Inflation

Persistent inflation hurting India's sovereign ratings - Moody's  Full Article 

Tracking Monsoon

Tracking Monsoon

Monsoon forecast to be better for crops next week  Full Article 

Carmichael Project

Carmichael Project

Adani buys Australia coal mine royalty rights from Linc for $145 million  Full Article 

GDP Preview

GDP Preview

Economy likely grew faster in June quarter: Reuters poll.  Full Article 

India-Japan Meet

India-Japan Meet

Modi eyes breakthrough nuclear pact on Japan trip   Full Article 

Monetary Policy

Monetary Policy

BofA says RBI may cut rates by 75-100 bps starting early 2015  Full Article 

Rare Earth Output

Rare Earth Output

India to chip in with 5 pct of global rare earth output  Full Article 

Reuters India Mobile

Reuters India Mobile

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