* Euro just off two-month low vs dollar on Greece fears
* Uncertainty over approaching U.S. 'fiscal cliff' remains
* Platinum market set to swing into deficit this year
By David Brough
LONDON, Nov 13 Gold eased for a second day on
Tuesday, along with losses in other commodities as worries over
the euro zone's handling of its debt crisis knocked the euro to
a two-month low against the dollar.
There was some respite for the single currency and European
assets in midday trading after a report that Germany wants to
bundle aid for Greece into a single payment.
But signs of a dispute between European officials and the
International Monetary Fund on Athens' latest aid payment kept
the euro near lows. A higher dollar makes gold more
expensive to buy in other currencies.
By 1457 GMT, gold was down 0.15 percent to $1,725.15 an
ounce, while U.S. gold futures for December had lost
$5.70 an ounce to $1,725.20.
Physical demand for gold also is likely to ease off in India
following the Diwali festival, Afshin Nabavi, head of trading at
MKS Finance, said.
"When the Diwali buying is out of the way, I would be
surprised if buyers came back to the same extent as before the
festival," he added.
A weakening rupee against the dollar has combined with an
increased gold import duty to drag down Indian purchases.
Nabavi said he expected gold to remain in its current range
of around $1,715-1,735 in the near term.
In the longer term, traders said gold may benefit from
uncertainty over the looming U.S. "fiscal cliff", which could
force nearly $600 billion worth of spending cuts and tax
increases at the end of this year, pushing the U.S. economy back
The precious metal hit a record $1,920.30 an ounce last
September when negotiations between Democrats and Republicans
over the raising of the U.S. debt ceiling turned sour.
Signs that negotiations may be more constructive this time
around, however, are starting to dampen some interest in one of
the assets investors favour as a safe haven in difficult
economic times. Gains earlier this month were largely due to
expectations that talks would be protracted and tense.
"Gold's rally may be starting to show signs of topping out,
as investors seem to be discounting the possibility of a fiscal
cliff deal being reached," INTL FCStone said in a note.
"However, we still have a long way to go before all the
sides agree, which means that we could see further gains in the
precious metals space before a more concerted sell-off sets in,
likely by early December."
Jon Bergteil, an analyst with Citibank, said, "If the two
U.S. political parties cannot compromise on the impending
'fiscal cliff' challenges, the dollar is likely to weaken and
hence give gold a short-term boost."
Delegates at this year's London Bullion Market Association
conference in Hong Kong, who forecast gold prices would be
around $1,843 by the time of next year's meeting, have adopted a
softer tone towards gold than in previous years.
"This year I sensed that the bullishness has moderated and
there is less conviction," Tom Kendall, head of precious metals
research at Credit Suisse, told Reuters at the event.
Growth in Chinese demand for gold, which surged in the last
five years to put China ahead of India as the world's largest
consumer, has shown signs of cooling this year.
Gold demand in India has been forecast to fall by up to 45
percent this year on the back of rupee weakness, high prices and
a hike in import duties but is set to recover in 2013, industry
officials said at the meeting.
Among other precious metals, silver was up 0.49
percent at $32.55 an ounce. Spot platinum was up 1.44
percent at $1,582.74 an ounce, while palladium was up
3.68 percent at $627.22 an ounce.
Supply outages in South Africa are set to push the platinum
market into deficit this year as shipments from the world's main
producer of the metal fall by 605,000 ounces, refiner Johnson
Matthey said on Tuesday.
Chinese platinum jewellery demand was forecast to jump in
2012 as Hong Kong retailers add outlets, while palladium
jewellery demand was expected to fall by a fifth in China.
But pent-up demand for new vehicles and cheap car financing
rates is likely to result in increased use of palladium in North
American autocatalyst production this year.