PRECIOUS-Gold edges down as dollar firms after no Greece deal

Wed Nov 21, 2012 3:58am EST

* Gaza violence continues as truce talks start
    * International lenders fail to agree on Greece bailout
    * Gold trapped in range between $1,700 and $1,740/oz
    * Coming up: U.S. Markit Manufacturing Flash PMI, Nov; 1358
GMT

 (Adds details; updates prices)
    By Rujun Shen
    SINGAPORE, Nov 21 (Reuters) - Gold inched lower on Wednesday
as the dollar firmed after Greece's lenders failed to strike a
debt deal for the country, although sentiment for bullion
remains supported by expectation of continuous monetary easing
by central banks. 
    Gold has settled in a range of $1,700 to $1,740 an ounce in
the past two weeks, after the re-election of U.S. President
Barack Obama cheered gold buyers who expect a continued loose
monetary policy to keep gold attractive as an inflation hedge.
    "Gold seems well supported towards the $1,700 level, and the
longer-term story hasn't changed much," said Nick Trevethan,
senior commodity strategist at ANZ in Singapore.
    Resilient Chinese demand, as well as official sector's gold
purchases are expected to support bullion prices, he added.
    China's consumer physical gold demand rose 22 percent from
the previous quarter to 176.8 tonnes in the third quarter, and
could further improve as year-end holidays encourage gold
purchases, said the World Gold Council. 
    Spot gold inched down 0.2 percent to $1,724.98 an
ounce by 0842 GMT, hurt by a drop in the euro. U.S. gold 
was little changed at $1,725.10.    
    The euro weakened against the dollar as after nearly 12
hours of talks through the night, euro zone finance ministers,
the International Monetary Fund and the European Central Bank
failed to reach a consensus, without which emergency aid cannot
be disbursed to debt-laden Athens. 
    A strong dollar weighs on commodities priced in the
greenback, including gold, as it makes them more expensive for
buyers holding other currencies. 
    The dollar was on course for its biggest daily rise in more
than two weeks against a basket of currencies. 
    But losses in bullion were checked by tensions in the Middle
East that increased the precious metal's safe-haven appeal.
    An exchange of fire between Palestinians and Israelis
continued as U.S. Secretary of State Hillary Clinton held talks
in Jerusalem seeking a truce. A failure to reach a cease-fire
would further support gold's safe-have appeal. 
    Traders are now eyeing U.S. talks on a looming "fiscal
cliff", $600-billion in tax hikes and spending cuts due to roll
in early next year that could push the country into a recession.
    Federal Reserve Chairman Ben Bernanke said on Tuesday the
central bank does not have the tools to offset damage caused by
the fiscal cliff if the Congress fails to reach an agreement.
  
    Traders and analysts expect gold to remain rangebound while
the budget talks continue, but say the longer-term outlook for
gold remains upbeat.
    Physical demand in Asia remained lacklustre as potential
buyers tightened their purse strings with the market showing no
clear direction.
    "Physical demand is very, very bad," said a Singapore-based
trader. "If prices drop another $30 to $50, we will probably see
investors and physical buyers return."    
    
   Precious metals prices 0842 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1724.98   -3.06   -0.18     10.31
  Spot Silver        32.98   -0.18   -0.54     19.10
  Spot Platinum    1566.99   -2.26   -0.14     12.49
  Spot Palladium    630.60   -2.62   -0.41     -3.36
  COMEX GOLD DEC2  1725.10    1.50   +0.09     10.10        22089
  COMEX SILVER DEC2  32.99    0.05   +0.17     18.16         6716
  Euro/Dollar       1.2763
  Dollar/Yen         82.00
  COMEX gold and silver contracts show the most active months
 
 (Editing by Himani Sarkar)
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