* Geopolitical tension simmers after Israeli strike on Hamas
* Markets digest Obama's update on "fiscal cliff"
* Coming up: U.S. CPI, NY, Philly manufacturing indexes
By Frank Tang
NEW YORK, Nov 14 Gold prices rose on Wednesday
on crude oil's gains amid rising geopolitical tension in the
Middle East, and traders continued to focus on how the United
States can avoid a debilitating fiscal crisis at the end of the
News that Israel killed the military commander of the
Palestinian group Hamas in a missile strike on the Gaza Strip
triggered safe-haven demand, while scenes of violent
anti-austerity strikes in Spain and Italy prompted investors to
buy gold as a hedge against economic uncertainty.
Bullion investors are digesting comments by President Barack
Obama to address the fiscal crisis. He said tax hikes on the
middle class could result in a recession if lawmakers fail to
agree on the tax and spending issues associated with the "fiscal
cliff" by year-end deadlines.
"Our short-term outlook continues to call for further gains
in gold, but we would not be surprised by a rather substantial
correction once a fiscal-cliff agreement is reached," said
Edward Meir, a metal analyst at futures brokerage INTL FCStone.
The market largely ignored minutes from the latest Federal
policy meeting in October, which showed that a number of Fed
officials thought the U.S. central bank would need to step up
asset purchases next year to fill the gap when the Operation
Twist program expires.
Spot gold edged down 43 cents to $1,724.46 an ounce
by 3:09 PM EST (2009 GMT), pressured by a 1 percent drop on Wall
Street late in the session.
U.S. COMEX gold futures for December delivery settled
up $5.30 at $1,730.10, with trading volume about 30 percent
below its 250-day average, preliminary Reuters data showed.
A more than 1 percent gain in Brent crude futures
after the Israeli air strike and higher grain prices lifted
The latest attacks marked the biggest escalation between
Israel and Gaza militants since a 2008-2009 conflict, and appear
to be pushing the two sides to the brink of a new war.
Gold prices had been pressured earlier after data showed
U.S. retail sales fell in October for the first time in three
months as Superstorm Sandy slammed the brakes on automobile
purchases, suggesting a loss of momentum in spending early in
the fourth quarter.
Silver rose 0.4 percent to $32.60 an ounce.
U.S. FISCAL CRISIS REMAINS FOCUS
The impending fiscal cliff preoccupied investors who
pondered how long Washington will take to reach a compromise and
avoid a series of mandated tax increases and spending cuts to be
triggered early next year that could send the world's largest
economy back into recession.
Gold could fall if the metal underperforms the U.S. dollar
as a safe haven in a liquidity-driven risk event such as the
fiscal crisis, said Daniel Brebner, an analyst with Deutsche
Platinum group metals were higher for a second day, rallying
on a bullish forecast that production outages earlier this year
could result in a supply deficit.
Platinum climbed to $1,597.50, its strongest
performance since Oct. 23, and later was up 75 cents at
Palladium hit a session high of $647.22, its
strongest since Oct. 18. It was last up 0.4 percent at $635.47
for the day.
3:09 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1730.10 5.30 0.3 1720.50 1734.10 127,104
US Silver DEC 32.88 0.393 1.2 32.365 32.930 39,926
US Plat JAN 1591.60 5.20 0.3 1579.20 1603.30 7,354
US Pall DEC 641.55 4.95 0.8 634.25 649.90 6,171
Gold 1724.46 -0.43 0.0 1721.18 1733.00
Silver 32.600 0.140 0.4 32.410 32.910
Platinum 1581.50 0.75 0.0 1580.25 1597.50
Palladium 635.47 2.75 0.4 635.50 647.22
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 137,878 149,890 177,286 15.43 -0.44
US Silver 48,505 41,873 55,951 23.41 -0.97
US Platinum 7,537 8,600 9,460 18.25 -0.75
US Palladium 6,979 3,376 4,495