Gold eased on Thursday, staying in sight of last week's four-month lows as investors focused on talks between the White House and Congress to prevent the US economy from plunging into recession next year. Republican House of Representatives Speaker John Boehner urged the Democrat-controlled Senate to act to pull back from the so-called fiscal cliff and offered to at least consider any bill the upper chamber produced, raising hopes there may be a way through deadlock in Congress.
Gold fell $1.89 an ounce to $1,657.6 by 1323 GMT. It has come off a 4-month low of $1,635.09 struck last Thursday, but remains well below a record high of around $1,920 hit in September 2011. US gold for February fell 0.12 percent to $1,658.70 an ounce. The United States faces $109 billion in across-the-board spending cuts starting in January unless a deal is reached to either replace or delay them. Democrats want to switch the spending cuts to tax increases for the most part.
"If the politicians reach an agreement on the fiscal cliff, the dollar could suffer and there could be more investment into gold," said Afshin Nabavi, head of trading at MKS Finance, referring to gold's behaviour as a risk asset similar to shares. He said he expected gold to trade in a range of $1,650-1,670 per ounce in the near term.
"Every time we go to the lows near $1,650, there seems to be good buying," Nabavi said, talking of brisk physical offtake over the past week from China and India, the world's top two gold consumers. A failure in the fiscal talks could spur safe-haven buying, boosting gold.
For the year, bullion is up around 6 percent, on track for a twelfth straight year of gains on rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks. Gold prices have benefited from the ultra-loose monetary policy of leading central banks because of gold's appeal as a hedge against inflationary fears.
Spot gold is expected to drop into a range of $1,397-$1,447 per ounce over the next three months, as indicated by its wave pattern and a Fibonacci retracement analysis, according to Reuters market analyst Wang Tao. Gold demand in India, the world's biggest buyer of the metal, remained strong on Thursday as jewellers were restocking for a festival, although retail demand was weak.
Randgold Resources Plc has cut the production forecast for its troubled Ivory Coast gold mine after a fire over Christmas at the project's mill. Silver was up 0.07 percent to $29.99 an ounce, platinum firmed 0.06 percent to $1,533.99 and palladium edged up 0.43 percent to $692.5 an ounce.
Comments
Comments are closed.