PRECIOUS-Gold rises on US budget talks, Fed stimulus hopes

Mon Dec 10, 2012 3:28pm EST

* Uncertainty over US budge talk, euro zone debt crisis
weigh
    * Investors eye Fed policy meeting on Dec 11-12 for
direction
    * Paulson & Co had mixed Nov. performance, cites weaker gold
    * Coming up: U.S. international trade, wholesale data
Tuesday

 (Adds market details, updates prices)
    By Frank Tang
    NEW YORK, Dec 10 (Reuters) - Gold rose for a third session
on Monday as investors were uncertain about the U.S. budget
crisis and hopeful that the Federal Reserve will unveil new
economic stimulus this week.
    Growing unease about Europe boosted safe-haven bids for
bullion after Italian Prime Minister Mario Monti announced he
would resign once the 2013 budget is approved. 
    Investors also bought more gold ahead of a two-day Fed
policy meeting. The U.S. central bank is expected to announce
monthly bond purchases of $45 billion, on top of the $40 billion
in mortgage-backed security purchases it announced in September.
  
    Also underpinning gold was a lack of apparent progress in
U.S. budget talks. U .S. President Barack Obama d id not provide
additional details after the White House and Re publican House
Speaker John Boehner's office held more negotiations on Monday
in a bid to break the "fiscal cliff" stalemate. 
    Analysts said safe havens such as gold and silver could sell
off in the near term if a budget deal is clinched.
    "Although markets are taking the lack of progress thus far
with an impressive degree of complacency, we wonder when a 
potential breaking point will be reached," said Edward Meir,
metals analyst at brokerage INTL FCStone. "As a result, we would
be cautious on gold and silver here." 
    Spot gold rose 0. 4 percent to $1,71 1 . 4 0 an ounce by
2 : 5 9 p . m. EST (19 59 GMT), r ebounding from a one-month low hit on
Friday after data showed U.S. employers hired more workers than
expected in November.
    Gold has gained almost 2 percent in the last three sessions,
as Friday's e ncouraging U.S. payrolls data did not change a view
that the Fed would continue to use monetary stimulus to boost
the ailing economy, lifting gold's inflation-hedge appeal.
    U.S. gold futures for February delivery settled up
$8.90 a t $1,714.40 an ounce, w ith t rading volume v ery light at
about 55 percent b elow its 30-day average, preliminary Reuters
data showed.
    PAULSON & CO HAD MIXED NOVEMBER
    The gold market largely ignored news that high-profile hedge
fund manager John Paulson told his clients on Friday evening
that his funds experienced mixed returns in November with softer
gold prices weighing on some portfolios. 
    Late Friday's CFTC data also showed hedge fund and money
managers cut their bullish bets on U.S. gold last week to the
lowest level since late August. 
    O ther precious metals with a stronger industrial demand
component outperformed gold, as China's data showed the
country's industrial output and retail sales rose in November at
their fastest annual pace in eight months, even though its
exports growth slowed sharply. 
    S ilver was up 0. 6 percent at $33. 19 an ounce.
Platinum climbed 1.3 percent to $1,61 6. 50, while
palladium gained 0. 6 p ercent to $697. 
 2:59 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold FEB   1714.40   8.90   0.5  1703.30 1718.80   76,246
 US Silver MAR  33.377  0.246   0.7   33.090  33.495   22,474
 US Plat JAN   1623.30  16.30   1.0  1607.70 1629.20    9,381
 US Pall MAR    704.75   6.75   1.0   695.25  706.00    3,777
                                                               
 Gold          1711.40   7.36   0.4  1703.33 1717.20         
 Silver         33.190  0.200   0.6   33.080  33.400
 Platinum      1616.50  21.50   1.3  1609.20 1625.00
 Palladium      697.00   4.00   0.6   697.00  702.50
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold         79,160   186,657   174,718     13.72    0.34
 US Silver       23,791    59,215    52,736      20.3   -1.36
 US Platinum     11,238     8,432     8,819     16.81    0.38
 US Palladium     3,787     6,073     4,758                  
                                                               
    

 (Additional reporting by David Brough in London)