PRECIOUS-Gold regains strength, U.S. fiscal crisis ends

Wed Jan 2, 2013 12:40pm IST

* U.S. resolves "fiscal cliff" drama
    * Spot gold signals mixed - technicals 
    * Coming Up: U.S. ICSC chain stores yy weekly; 1245 GMT

 (Updates prices, adds fresh quotes)
    By Lewa Pardomuan
    SINGAPORE, Jan 2 (Reuters) - Gold rebounded from intraday
lows on Wednesday after the U.S. Congress finally passed a bill
that avoids tax hikes and spending cuts worth $600 billion, but
the temporary reprieve drew muted reaction from bullion
investors in Asia.
    Even though the world's biggest economy will no longer go
over the "fiscal cliff", other bruising budget battles lie ahead
in the next two months. 
    Gold added $7.01 an ounce to $1,681.55 by 0649 GMT   
     after hitting a low around $1,670. Gold ended up around 7
percent in 2012, the 12th straight year of gains for the
precious metal in what is one of the longest bull runs ever for
a commodity. 
    Gold struck a record of around $1,920 in September 2011,
when a worsening debt crisis in Europe sparked a buying rush.
    "Right now nobody really seems to be doing very
much. Investors want to see how other markets react, equity
markets in particular," said Nick Trevethan, senior metals
strategist at ANZ in Singapore.
    "If we start to see a bit of a gain in equity markets, gold
will probably follow suit. I suspect investors in this part of
the world want to see how Europe and U.S. investors react," he
added. 
     U.S. gold for February rose $6.50 an ounce to
$1,682.30 an ounce.       
    
    Stocks hit a five-month high in Asia and the dollar fell as
a last-minute deal ended the U.S. fiscal crisis which threatened
to send the economy back into recession and roil world financial
markets. 
    "In the first quarter of 2013, economic uncertainty on the
outcome of the U.S. fiscal cliff, among other factors, warrants
a defensive posture," UBS said in its 2013 outlook. 
    "We therefore think gold and platinum are an outright buy at
present levels as both metals have very low supply elasticity
and are key beneficiaries of loose monetary policy," the bank
added.
    "In the case of gold, we still target the level of $1,950 an
ounce over the next three months, while we expect platinum to
move to $1,800 an ounce over the same period."
    Platinum ended 2012 up around 10 percent, mainly
driven by concerns about widespread miner strikes in top
producer South Africa. Platinum is used as an auto
catalyst. 
    Gold is traditionally an inflation hedge and a market that
investors rush to in times of trouble, but the metal has lately
behaved more like an industrial commodity - rising and falling
with the stock market and sometimes even following the dollar.
    Since many investors have both equities and gold in their
portfolios, bullion also closely watches movements in stock
markets.  
    "Whatever happens in Washington, we suspect gold will likely
do better over the next few weeks as the colossal failure of
political will to get America's fiscal house in order should
provide fodder for the gold bugs to bid prices higher," said
Edward Meir, metals analyst at brokerage INTL FCStone. 
     U.S. stocks are poised for gains to begin the year after
the late passage of a bill to avoid the harsh tax hikes that
would have hit most Americans and crimped economic growth.
 
       
  Precious metals prices 0649 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1681.55    7.01   +0.42      0.42
  Spot Silver        30.59    0.31   +1.02      1.02
  Spot Platinum    1546.74   11.74   +0.76      0.76
  Spot Palladium    704.22   12.22   +1.77      1.77
  COMEX GOLD FEB3  1682.30    6.50   +0.39      0.39        14037
  COMEX SILVER MAR3  30.63    0.40   +1.33      1.32         2903
  Euro/Dollar       1.3268
  Dollar/Yen         87.19
 
    
    
    
    

 (Editing by Michael Urquhart and Miral Fahmy)
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