Gold ticks higher; on track for 12th annual gain

SINGAPORE Mon Dec 31, 2012 9:20am IST

Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in New York, September 15, 2011. REUTERS/Mike Segar/Files

Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in New York, September 15, 2011.

Credit: Reuters/Mike Segar/Files

Related Topics

SINGAPORE (Reuters) - Gold ticked up to around $1,660 an ounce on Monday after the euro firmed against the dollar, but wary investors stayed on the sidelines as last-ditch attempts by U.S. lawmakers to resolve a fiscal crisis seemed to be getting nowhere.

Lawmakers pushed the United States to the edge of the "fiscal cliff" as they struggled to reach a last-minute deal that could prevent the world's largest economy from plunging into recession. After adjourning for the day, the Senate will reconvene at 1600 GMT on Monday.

"Maybe a bit of cooling off is good. Well, they have a few hours to sort themselves," said CIMB regional economist Song Seng Wun. "I think Asian equities are probably, at this moment, positioning themselves for a possibility that there may not a be last minute compromise of sorts."

Gold added $5.12 an ounce to $1,660.02 by 0310 GMT. It is up around 6 percent for the year, heading 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.

A failure to clinch a deal would likely spur safe-haven buying of gold, but since many investors have both equities and gold in their portfolios, the metal may also track stock markets higher if the White House and Congress finally reach an agreement.

U.S. gold for February rose $5.20 an ounce to $1,661.10.

Market holidays were in force in Japan, South Korea, Taiwan, Indonesia, Thailand, the Philippines and Vietnam, with half-day trading in Australia, New Zealand, Hong Kong and Singapore.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed. It has gained about 18 percent this year, a sharp turnaround from an 18 percent plunge in 2011.

"I have nothing to share today. I guess the market in the Middle East will still be trading a little bit. But that's a about it," said a physical gold dealer in Singapore.

"Premiums are unchanged at $1 to $1.20."

Spot gold drew support from the euro that edged up 0.1 percent to $1.3231, but hovered below an 8-month high of $1.33085 hit on December 19.

An agreement on the U.S. budget would be viewed as a positive for riskier currencies such as the euro and Australian dollar, while a deadlock would be deemed positive for the safe-haven and highly liquid dollar.

A softer dollar boosts commodities priced in the greenback by making them cheaper for holders of other currencies.

"There's nothing at all in Asia. It's very quiet. We don't expect surprises until the talks resume," said a dealer in Singapore.

Buoyed by his re-election in November, President Barack Obama has insisted that any deal must include a tax increase on the wealthiest Americans, who have seen their earnings rise steadily over the past decade at a time when income for the less affluent has stalled.

(Editing by Himani Sarkar)

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

Trade Deal

REUTERS SHOWCASE

Record High

Record High

Nifty hits record high on foreign buying, higher Asian stocks.  Full Article 

Bullish on Equities

Bullish on Equities

Bullish on Indian equities, but gains seen 'less sharp'- Goldman Sachs  Full Article 

Facebook Results

Facebook Results

Second quarter revenue increases 61 percent  Full Article 

BRICS Bank

BRICS Bank

World Bank chief welcomes new BRICS development bank.  Full Article 

Streamlining Operations

Jet Streamlines

Jet Airways chairman says looking to restructure debts, talking to bankers  Full Article 

Political Economy

Political Economy

Analysis - Watch what markets don't do as world politics turns nasty   Full Article 

Photo

Honda's India Thrust

Honda's India unit to account for 25 pct of Asia Pacific sales by March 2017 - exec   Full Article 

 Boosting Output

Boosting Output

NMDC plans to boost iron ore output by two-thirds  Full Article 

Apple Results

Apple Results

Apple margin concerns fade, focus shifts to iPhone launch  Full Article 

Reuters India Mobile

Reuters India Mobile

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