PRECIOUS-Gold up after U.S. budget deal but seen vulnerable

* Gold touches two-week high as equities rally helps
* Option volume on gold miners ETF heavier than usual
* India central bank looks at further curbs on gold imports
* Coming up: US Markit PMI, construction spending Thurs

By Frank Tang
NEW YORK, Jan 2 (Reuters) - Gold rose nearly 1 percent on
Wednesday, as economic optimism fuelled sharp gains on Wall
Street after U.S. lawmakers clinched a last-minute deal to avoid
tax hikes that threatened to send the economy back to a
recession.
Silver and platinum group metals also rose sharply after the
Congress passed a bill to avert immediate austerity measures,
as it raised taxes on wealthy individuals and families and
preserved certain benefits. GOL
Bullion, however, appears to lack momentum to extend its
rally on the first trading day of 2013, analysts said. Signs of
stalling growth in Europe and a plan by India to curb gold
import could prompt investors to sell.
"I think the reaction is way overdone, and I wouldn't be
surprised to see a fairly substantial sell-off that could erase
a lot - if not all - of these gains," said Frank McGhee, head
precious metals trader at Integrated Brokerage Services.
Spot gold was up 0.8 percent at $1,687.60 an ounce by
2:54 p.m. EST (1954 GMT), off a two-week high of $1,694.70
reached earlier in the session.
Gold ended up around 7 percent in 2012 for its 12th straight
year of gains, although it recorded a soft final quarter when it
fell 5.4 percent, its worst quarterly performance since the
third quarter of 2008.
Silver rose 2.4 percent to $31.01 an ounce.
Uncertainty remained after the U.S. deal. Spending cuts of
$109 billion in military and domestic programs were only delayed
for two months, and another fight over the U.S. debt limit looms
at that time as well.
U.S. COMEX gold futures for February delivery settled
up $13.00 an ounce to $1,688.80 an ounce, with trading volume at
around 30 percent below its 30-day average, preliminary Reuters
data showed.
However, options turnover in Market Vectors Gold Miners Fund
, an exchange-traded fund (ETF) for gold producers,
nearly doubled its daily average as investors were buying
options ahead of the sector's next move, said WhatsTrading.com
options strategist Frederic Ruffy.

INDIA SETS GOLD IMPORT LIMIT
Gold prices could face headwinds from soft physical demand,
as bullion consumers in India scale back their purchases.
India's central bank has asked that volume and value
restrictions be placed on gold imports by banks and agencies to
help rein in a current account gap, which touched an all-time
high in the July-September quarter.
Also a potential drag on bullion was news that car sales in
France and Spain in 2012 fell to the lowest levels in years.

Platinum group metals rose, but were well off their session
highs. Platinum was up 1.8 percent to $1,562.74, while
palladium rose 1.9 percent to $704.96 an ounce, well off
$715.72, the highest price since March 2, 2012.
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.
2:54 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold FEB 1688.80 13.00 0.8 1670.90 1695.40 108,609
US Silver MAR 31.007 0.780 2.6 30.225 31.535 33,826
US Plat JAN 1565.10 26.40 1.7 1536.60 1578.40 450
US Pall MAR 707.95 4.60 0.7 696.75 718.85 5,209

Gold 1687.60 13.06 0.8 1670.95 1694.70
Silver 31.010 0.730 2.4 30.220 31.490
Platinum 1562.74 27.74 1.8 1538.50 1575.00
Palladium 704.96 12.96 1.9 699.52 715.72

TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 123,939 165,656 174,396 12.98 -0.12
US Silver 36,876 54,812 52,585 22.2 1.55
US Platinum 9,148 12,741 8,902 17.86 -0.55
US Palladium 5,236 5,410 4,737