PRECIOUS-Gold extends losses as investors eye US fiscal talks

Wed Nov 28, 2012 1:45am EST

* SPDR Gold Trust holdings hit record high
    * Spot gold to retrace to $1,722/oz - technicals
    * Coming up: U.S. new home sales, Oct; 1500 GMT

 (Adds details; updates prices)
    By Rujun Shen
    SINGAPORE, Nov 28 (Reuters) - Gold edged lower on Wednesday,
extending its losses to a third day, as the euphoria over a
Greek debt deal fizzled and investors shifted their focus to
U.S. negotiations to avert a looming fiscal disaster in the
world's largest economy.
    But gold's appeal as a refuge from uncertain economic
conditions remained intact as indicated by the holdings of SPDR
Gold Trust, the world's largest gold-backed
exchange-traded fund, which rose to a record high.
    U.S. lawmakers resumed talks on how to avoid $600 billion
worth of tax hikes and spending cuts that are due to kick off in
early 2013, but progress has been slow. 
    The threat of the U.S. economy slipping off the fiscal cliff
may keep gold prices supported, but the strength in the dollar -
a more popular safe haven - is likely to put a cap on gains.
    The dollar index rebounded from a 3-1/2-week low hit
in the previous session, supported by worries about a lingering
euro zone debt crisis and decent economic data from the United
States.  
    "We may see gold consolidate or correct a bit in the short
term as the market lacks incentives after the Greek deal, while
the dollar appears supported," said Li Ning, an analyst at
Shanghai CIFCO Futures.
    There is not much room on the downside, and prices are
firmly supported by the 20-day moving average at about $1,724 an
ounce, she added.
    Reuters market analyst Wang Tao expected spot gold to
retrace to $1,722 during the day, as it may have peaked on its
rebound from the Nov. 5 low of $1,672.24. 
    Spot gold inched down 0.3 percent to $1,737.14 an
ounce by 0626 GMT.
    U.S. gold also lost 0.3 percent, to $1,737.60.
    
    
    SPDR HOLDINGS HIT RECORD HIGH; ISHARES SILVER TRUST STAGNANT
    Holdings of SPDR Gold Trust rose to a record high of
1,345.813 tonnes on Nov. 27, while iShares Silver Trust,
the world's largest silver ETF, saw its holdings remain near a
two-month low of 9,818.07 tonnes.
    In contrast to the stagnant holdings in the silver ETF, spot
silver rose to $34.26 an ounce on Tuesday, its loftiest
level since mid-October, before easing to $33.82 but still
leading the year-to-date performance in the precious metals
complex with a 22-percent rise.
    Silver is notorious for its volatility. The metal burned the
fingers of many investors last year during its surge to a
historical high and a subsequent tumble that saw prices fall
more than a third within 10 trading days. 
    "I'm less sanguine about silver, as lots of mine supply is
coming on line and silver doesn't have the same safe-haven
status as gold," said a Sydney-based trader.
    
      Precious metals prices 0626 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1737.14   -4.51   -0.26     11.08
  Spot Silver        33.82   -0.20   -0.59     22.14
  Spot Platinum    1597.49  -10.76   -0.67     14.68
  Spot Palladium    659.22   -5.99   -0.90      1.03
  COMEX GOLD DEC2  1737.60   -4.70   -0.27     10.90        14745
  COMEX SILVER DEC2  33.83   -0.16   -0.46     21.17         4768
  Euro/Dollar       1.2915
  Dollar/Yen         81.77
  COMEX gold and silver contracts show the most active months
 
 (Editing by Himani Sarkar)