US MIDDAY: gold down

Gold turned lower on Wednesday, tracking equities and crude sell-offs, as investors renewed their focus on a looming US fiscal crisis after initial optimism following the re-election of President Barack Obama. Earlier in the day, bullion rose nearly 1 percent as Obama's victory fuelled speculation that four more years of a Democrat in the White Houses would contribute to an extension of the Federal Reserve's easy monetary policy.
Gold's rally later fizzled as a sell-off on Wall Street deepened by worries over the "fiscal cliff," a $600 billion package of tax increases and spending cuts to take effect automatically at the end of 2012, a scenario that could severely strain the economy. "The re-election of President Barack Obama means we are turning our focus back to the fiscal cliff, and the uncertainty of US policies can send gold in either direction," said Jeffrey Sherman, commodities portfolio manager of DoubleLine Capital LP, which manages more than $45 billion in assets.
Spot gold was down 0.2 percent at $1,711.70 an ounce by 12:41 pm EST (1741 GMT), after hitting a session low at $1,703.80, which was nearly $30 below an earlier high of $1,731.40. US gold futures for December delivery was down $3.30 at $1,711.70, with trading volume already at 25 percent above its 250-day average and set to finish at its strongest in about 2 months, preliminary Reuters data showed.
A Congress split between the two parties will keep open the likelihood of messy negotiations to avert the fiscal crisis that risk pushing the economy into deep recession. Gold was hit by heavy liquidation pressure from outside markets. The S&P 500 index fell over 2 percent to drop below 1,400 points for the first time in more than two months, and US crude futures tumbled 4.5 percent.
Andrew Cole, fund manager with Baring Asset Management, said: "I think people would be less inclined to own US stocks and bonds in an event where they don't know how policy will be fixed." However, he saw an eventual return to more tolerance of risk, which would see gold weaken. Other precious metals also tracked the boarder markets to reverse earlier gains. Silver fell 1.1 percent to $31.61 an ounce. Platinum was down 0.5 percent at $1,541.75, while palladium fell 1.2 percent to $606.50.