PRECIOUS-Gold flat after coming off 2-mth low; US election in focus

Tue Nov 6, 2012 2:39am EST

* Investors seek policy direction after US election, China
changes
    * Spot gold to hover above $1,678/oz - technicals
    * Coming up: euro zone producer prices for September at 1000
GMT

 (Updates prices)
    By Rujun Shen
    SINGAPORE, Nov 6 (Reuters) - Gold traded little changed on
Tuesday as investors awaited potential policy spinoffs from the
U.S. presidential election, while China's upcoming leadership
transition and Greece's strike over a new austerity package also
kept sentiment cautious.
    U.S. President Barack Obama and Republican candidate Mitt
Romney are engaged in frantic last-minute campaigns in swing
states. A Romney victory may weigh on gold prices as hopes for
further monetary easing may dim, hurting prospects for bullion.
  
    Investors are also waiting for the once-a-decade leadership
transition in China, with expectations for clearer economic
policy direction once a new leadership team is in place after
the 18th Communist Party Congress, which is scheduled to open on
Thursday. 
    "Clients are holding back ahead of the U.S. election," said
Brian Lan, managing director at GoldSilver Central Pte Ltd in
Singapore, adding that the recent price dip in gold had
attracted retail investors in the region.
    Spot gold was trading nearly flat at $1,684.46 an
ounce by 0723 GMT, rebounding from a two-month low of $1,672.24
in the previous session.
    U.S. gold barely moved at $1,684.40.
    Technical analysis suggested spot gold may remain above its
support zone of $1,675-$1,678 an ounce during the day, as there
is no indication of a break below this zone, said Reuters market
analyst Wang Tao. 
    
    But some traders said the election result would only have a
short-term impact on market sentiment, as it was unlikely to
lead to immediate changes in U.S. economic prospects.
    The latest data showed that the expansion in the vast U.S.
services sector slowed slightly last month, suggesting growth in
the world's largest economy would remain modest, while activity
in China's services industry also waned. 
    "It is more sentiment-related, since the stimulus measures
already announced by the Fed can't be taken back and the
election result won't change the economy overnight," said a
Shanghai-based trader.
    Uncertainty over the euro zone's debt crisis lingered, with
Greece's new austerity package greeted by strikes and protests.
 
    Holdings of gold-backed exchange-traded funds
 stood at 75.074 million ounces by Nov. 4, just a
touch off the historical high of 75.086 million ounces marked in
late October.    
    Spot silver inched down 0.1 percent to $31.12 an
ounce, off $30.64 hit in the previous session, its lowest level
since the end of August.
    "Silver could test $30 or even below in late November and
December, as physical demand is poor and the situation in the
euro zone is still quite bad," said the trader in Shanghai.
    

   Precious metals prices 0723 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1684.46    0.47   +0.03      7.72
  Spot Silver        31.12   -0.03   -0.10     12.39
  Spot Platinum    1542.25    3.01   +0.20     10.71
  Spot Palladium    611.50    2.53   +0.42     -6.28
  COMEX GOLD DEC2  1684.40    1.20   +0.07      7.51        10597
  COMEX SILVER DEC2  31.12   -0.01   -0.04     11.46         4774
  Euro/Dollar       1.2774
  Dollar/Yen         80.02
  COMEX gold and silver contracts show the most active months 
  

 (Editing by Robert Birsel)