PRECIOUS-Gold up but off highs, post-election fiscal crisis eyed

* Heavy sell-offs in U.S. equities, crude weighs
* Attention shifts to resolving U.S. "fiscal cliff"
* Early rally on Obama win, more economic stimulus fizzles
* Coming up: U.S. international trade, jobless claims
Thursday

By Frank Tang
NEW YORK, Nov 7 (Reuters) - Gold pared gains on Wednesday
ending slightly higher, after d eclines i n e quities and crude o il
knocked bullion off its high, as investors zeroed in on a
looming U.S. fiscal crisis following the re-election of
President Barack Obama.
Earlier in the day, bullion rose nearly 1 percent as Obama's
victory fuelled speculation that four more years of a Democrat
in the White House would contribute to an extension of the
Federal Reserve's easy monetary policy.
Gold's rally later fizzled as a sell-off on Wall Street
deepened worries over the "fiscal cliff," a $600 billion package
of tax increases and spending cuts to take effect automatically
at the end of 2012, a scenario that could severely strain the
economy.
"The re-election of President Barack Obama means we are
turning our focus back to the fiscal cliff, and the uncertainty
of U.S. policies can send gold in either direction," said
Jeffrey Sherman, commodities portfolio manager of DoubleLine
Capital LP, which manages more than $45 billion in assets.
Worries about deflationary forces due to the fiscal crisis
could weigh on gold. However, huge economic uncertainty related
to the country's fiscal accounts in 2011 had boosted safe-haven
demand and sent gold to a record high.
Spot gold was up 0.2 percent at $1,71 9 . 51 an ounce by
3:18 PM ES T (2 051 GMT), after hitting a session low at
$1,703.80, which was nearly $30 below an earlier high of
$1,731.40.
U.S. gold futures for December delivery settled down
$1 at $1,714 an ounce.
T rading volume was at a strong 270,000 lots, or 53 percent
above its 250-day average, and set to finish at its h ighest in
about 2 months, preliminary Reuters data showed.

FISCAL CRISIS EYED
A split Congress will keep open the likelihood of messy
negotiations to avert the fiscal crisis that risks pushing the
economy into deep recession.
Gold was hit by heavy liquidation pressure from outside
markets w hich were pummelled by economic fears. The S&P 500
index fell over 2 percent to drop below 1,400 points for
the first time in more than two months, and U.S. crude futures
tumbled 4.5 percent.
Andrew Cole, fund manager with Baring Asset Management,
said: "I think people would be less inclined to own U.S. stocks
and bonds in an event where they don't know how policy will be
fixed."
However, he saw an eventual return to more tolerance of
risk, which would see gold weaken.
Other precious metals also tracked the boarder markets to
reverse earlier gains.
Silver edged down 0 . 3 percent to $31. 87 an ounce.
A mong platinum group metals, pl atinum was down 0.6
p ercent at $1,540. 2 4 , while palladium fell 0. 7 p ercent to
$609.5 0 .

3:18 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1714.00 -1.00 -0.1 1703.00 1733.00 240,468
US Silver DEC 31.661 -0.373 -1.2 31.215 32.420 62,619
US Plat JAN 1539.50 -18.80 -1.2 1534.50 1569.90 10,515
US Pall DEC 610.35 -9.80 -1.6 602.60 625.15 4,195

Gold 1719.51 4.17 0.2 1703.80 1731.40
Silver 31.870 -0.080 -0.3 31.250 32.400
Platinum 1540.24 -9.75 -0.6 1537.25 1564.25
Palladium 609.50 -4.10 -0.7 606.02 622.50

TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 270,101 147,521 176,015 16.37 -0.38
US Silver 73,108 40,861 55,593 27.87 1.99
US Platinum 10,721 10,790 9,378 19.23 0.03
US Palladium 4,449 3,337 4,466