Gold edges down, U.S. fiscal talks in focus

SINGAPORE Thu Dec 27, 2012 8:58am IST

An employee shows a 1 gram piece of a gold Combibar at a plant of gold refiner and bar manufacturer Valcambi SA in the southern Swiss town of Balerna December 20, 2012. REUTERS/Michael Buholzer

An employee shows a 1 gram piece of a gold Combibar at a plant of gold refiner and bar manufacturer Valcambi SA in the southern Swiss town of Balerna December 20, 2012.

Credit: Reuters/Michael Buholzer

Related Topics

SINGAPORE (Reuters) - Gold inched down in thin trade on Thursday, with investors keeping a close eye on talks between the White House and Congress to prevent the U.S. economy from plunging into recession next year.

Republican House of Representatives Speaker John Boehner urged the Democrat-controlled Senate to act to pull back from the so-called fiscal cliff and offered to at least consider any bill the upper chamber produced, raising hopes there may be a way through deadlock in Congress.

Gold fell $2.13 an ounce to $1,657.36 by 0303 GMT. It has come off a 4-month low struck last week, but remains below a record high of around $1,920 hit in September 2011.

The United States faces $109 billion in across-the-board spending cuts starting in January unless a deal is reached to either replace or delay them. Democrats want to switch the spending cuts to tax increases for the most part.

"Most investors are definitely not hoping for the worse as they don't only hold precious metals in their investment portfolio. So of course they are hoping the talks will come through," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore.

"But it doesn't bode well for (precious) metals if the talks come through. However it will only be temporary as we foresee that metals will still continue to shine. In 2013, we are expecting precious metals to close the year higher compared to the price level we see today."

A failure in the fiscal talks could spur safe-haven buying, boosting gold.

For the year, bullion is up around 6 percent, on track for a 12th straight year of gains on rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks.

U.S. gold for February slipped $2.40 to $1,658.30 an ounce.

Shares were little changed in Asia on Thursday on investor edginess about the chances of U.S. lawmakers striking a deal to avoid a fiscal crunch by December 31, while the yen stayed under pressure on the prospect of drastic monetary easing and massive fiscal spending.

Investors also await the release of U.S. weekly jobless claims data due at 1330 GMT. Economists in a Reuters survey forecast a total of 360,000 new filings compared with 361,000 in the prior week.

A weaker yen lifted gold contracts on Tokyo Commodity Exchange, but physical trading had slowed to a trickle in Tokyo, where gold bars were offered at zero premiums to the spot London prices.

"It's the end of the year, so the Japanese market is very quiet. There's still a strong selling interest. Gold doesn't fetch any premiums at this moment," said a dealer in Tokyo.

(Reporting by Lewa Pardomuan; Editing by Himani Sarkar)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Republic Day

Reuters Showcase

Coal Mining

Coal Mining

India to open coal to commercial mining firms soon, minister says  Full Article 

RBI Loan Rules

RBI Loan Rules

RBI relaxes overseas loan recast rules   Full Article 

E-commerce Firms

E-commerce Firms

Amazon, e-commerce rivals fuel commercial property boom in India  Full Article 

Growth Forecasts

Growth Forecasts

Indian economic growth forecasts pegged back, despite rate cuts: Reuters Poll.  Full Article 

Uber is Back

Uber is Back

Uber back in Delhi; govt says must await approval.  Full Article 

Markets at Record

Markets at Record

Sensex rises to record after ECB stimulus programme.  Full Article 

Pharma Sector

Pharma Sector

Ipca Labs hit by FDA ban on plant for standard violations.  Full Article | Related Story 

Forex Reserves

Forex Reserves

India FX reserves at record high as RBI fortifies defences  Full Article 

QE for Euro Zone

QE for Euro Zone

ECB launches 1 trillion euro rescue plan to revive euro economy.  Full Article 

Reuters India Mobile

Reuters India Mobile

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