Gold fell on Friday, wiping out what would have been its first weekly gain since November, as traders priced the market lower while awaiting the outcome of last-ditch US budget talks before a year-end deadline. Most markets were on tenterhooks as President Barack Obama scheduled a 3:00 p.m. EST (2000 GMT) meeting at the White House with congressional leaders from the Democratic and Republican parties to restart stalled talks on the budget.
By 2:20 p.m., the spot price of gold was hovering around $1,656 an ounce, versus Thursday's last bid at $1,663.29. US gold futures for February delivery settled down $7.80, or 0.5 percent, at $1,655.90 an ounce in New York. Traditionally a safe haven and inflation hedge that investors rush to in times of trouble, gold has lately behaved like a risk asset - often rising and falling with the stock market and sometimes following the dollar.
Spot gold and futures showed a modest loss on the week after Friday's decline wiped out gains built from Monday through Thursday. Despite the somewhat surprising swing, most dealers found this week's moves in gold too puny for a market that had been modelled as a key hedge to the US fiscal crisis. "It strikes me that the gold market really doesn't quite know where to go at this moment," said Adrian Day at Adrian Day Asset Management in Annapolis, Maryland.
In Friday's session, volume in gold futures was around 60 percent below the 30-day average, making it one of the least traded markets on the 19-commodity Thomson Reuters-Jefferies CRB index. The rally in those quarters has given gold a 6 percent gain on the year, extending its winning streak to a 12th year. Analysts said heavy profit-taking in gold over the past month - as some bullion owners try to cash in this year's gains - may be offsetting any rally culminating from those buying gold as a safe haven. In other precious metals, silver was down 0.5 percent at $30 an ounce, while platinum eased 1 percent to $1,516.50 and palladium dipped 2 percent to $692.47.
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