US MIDDAY: gold steadies

Gold erased losses and steadied at around $1,715 an ounce on Friday, but was on course for a weekly loss as investors focused on uncertainty over global growth and worries over the US "fiscal cliff" when $600 billion worth of tax increases and deep spending cuts will set in early next year. Spot gold was flat at $1,715.21 an ounce at 1452 GMT, and was on track for a weekly loss after prices climbed more than 3 percent last week.
US gold was up $1.30 at $1,715.10. Gold had slid more than 1 percent to a one-week low on Thursday following falls in equity markets. Gold had edged down earlier on Friday as some investors liquidated profits from bullion to cover losses in other markets such as equities. Later, gold failed to react to an unexpected drop in US industrial output in October. Matthew Turner, analyst with Mitsubishi, said the lack of a gold price reaction could be because the market was trying to assess the impact of superstorm Sandy on the data.
"It's confusing data because of the effect of the hurricane," he said. Industrial production contracted 0.4 percent last month after a revised 0.2 percent increase in September, the Federal Reserve said on Friday. The gold market's attention is largely focused on the budget talks between US President Barack Obama and Congressional leaders. As the two sides prepared for the talks on Friday aimed at preventing the US economy from falling back into recession, Democrats and Republicans dug in on their long-held opposing positions.
Gold's safe haven status would shine in the case of failed talks and political paralysis, while success in avoiding the fiscal disaster may dampen sentiment in gold, analysts said. Technical analysis suggested spot gold could test support at $1,701 an ounce, a break below which will open the way towards $1,672.24, according to Reuters market analyst Wang Tao.
Gold has drifted over the past week or so as support from President Obama's re-election faded and political uncertainty around the fiscal problems kept some investors on the sidelines. But gold investment demand remains resilient. Holdings of the SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, rose to 1,339.616 tonnes by November 15, just a touch off the record high of $1,340.521 tonnes hit in October.
China produced 38.5 tonnes of gold in September, bringing total output in the first eight months of the year to 288.2 tonnes, up 11.3 percent from a year ago, the Ministry of Industry and Information Technology said on Friday. Platinum group metals prices came under downward pressure after the end of strikes that had swept South Africa's mining sector. Platinum eased 0.99 percent to $1,553.75, while sister metal palladium was last at $627.50, down 0.27 percent. Silver was down 0.21 percent at $32.52 an ounce.