Gold dips in Europe

Gold edged lower on Friday ahead of talks to prevent the United States from plunging off a so-called "fiscal cliff" of tax increases and spending cuts, but prices were still on track for their first weekly gain in a month. Failure to clinch a deal in the United States could trigger safe-haven buying of bullion, but if the White House and Congress do reach an agreement, gold may track stock markets higher.
Gold fell $2.77 or 0.17 percent to $1,660.52 an ounce by 1442 GMT. It has come off a four-month low of $1,635.09 hit on Dec. 20. For the year, gold is up around 6 percent but is still well below a record high of around $1,920 reached in September 2011, when a worsening debt crisis in Europe sparked a buying rush. US gold for February eased $2.00 an ounce to $1,661.70. Andrey Kryuchenkov, an analyst with VTB Capital, said he expected gold to rise along with equities if a timely compromise is reached on the US budget.
"Gold will follow the rest - it will be trading with the risky assets," he said. US President Barack Obama and lawmakers are launching a last-chance round of budget talks days before a New Year's deadline to reach a deal to head off tax hikes and spending cuts that amount to $600 billion. Gold is traditionally a safe haven and a hedge against inflation that investors rush to in times of trouble, but it has lately behaved like any risk asset.
It is heading for a 12th straight year of gains based on rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks. Global gold demand in 2013 is likely to be led by further strength in China and a recovery in India, helping continue its bull run into a 13th year, the industry-backed World Gold Council said.
Gold demand in India, the world's biggest buyer, was moderate on Friday as jewellers replenished inventory for festivals and the wedding season, but retail and investment demand remained sluggish. In other news, a South African lawyer moved to file a class action suit against more than 30 gold firms on behalf of 17,000 former miners who say they contracted silicosis, a debilitating lung disease, due to negligence in health and safety. Silver was down 0.36 percent to $30.05 an ounce, while platinum eased 0.49 percent to $1,522.99 and palladium dipped 0.57 percent to $702.22 an ounce.