PRECIOUS-Gold ends near flat, capped by US budget talks progress

Mon Dec 17, 2012 3:49pm EST

* Signs of progress in US budget talks pressure safe havens
    * Monday's talk between Boehner, Obama seen as step forward
    * Silver breaks below 100 DMA for first time since August
    * Platinum group metals ignore US copper ETF approval news
    * Coming up: U.S. current account Tuesday

 (Adds market details, updates prices)
    By Frank Tang
    NEW YORK, Dec 17 (Reuters) - Spot gold prices ended little
changed o n M onday as pressure from signs of positive
developments in U.S. negotiations to avoid the "fiscal cliff"
neutralized safe-haven bidding in the precious metal.
    Earlier in the session, bullion climbed on hopes that the
Bank of Japan would use more monetary stimulus after Japan's
next prime minister, Shinzo Abe, called for the aggressive
measure to boost growth. 
    But gold fell back after the Speaker of the U.S. House of
Representatives John Boehner and President Barack Obama held
another meeting on Monday to avert the potentially recessionary
spending cuts and tax increases that will automatically take
effect in January. Many see Boehner's weekend proposal which
included tax increase as a potential breakthrough in the talks.
 
    The metal had fallen for a third straight week last week.
Gold, a traditional inflation hedge, has been under pressure as
many economists expect the $600 billion in tax hikes and
spending cuts could send the U.S. economy back into a recession.
    "Should we get a sell-off, we suspect gold will be caught up
in the resulting downdraft. We remain cautious on the markets
short-term," said Edward Meir, precious metals analyst at
brokerage INTL FCStone.    
    Spot gold was up 0.1 percent at $1,696.04 an ounce by
2:56 p.m. EST (1956 GMT), having traded in a relatively narrow
$13 range.
    U.S. COMEX gold futures for February delivery settled
up $1.20 at $1,698.20, with trading volume on track to finish
more than 50 percent below its 30-day average, preliminary
Reuters data showed.
    Last week, gold briefly rose to a two-week high above $1,720
an ounce after the U.S. Federal Reserve pledged to buy $45
billion a month in longer-term Treasuries, a potentially
inflationary move that was expected to underscore gold's
reputation as a good inflation hedge.
    It swiftly retraced those gains, however, in line with other
financial markets. Some investors took profits in gold, which is
up 8.5 percent year to date, as trading desks prepared to close
the book for year-end.
    Meanwhile, silver briefly drifted below a 100-day
moving average of $32.14 an ounce, a level it had held since
mid-August.
    It was up a penny for the day at $32.16, off a one-month low
 hit earlier in the session.
    
    U.S. BUDGET TALKS STILL IN FOCUS
    Tom Kendall, head of precious metals research at Credit
Suisse, said gold was getting little support from speculation
over the fiscal cliff at present.
    A new proposal for tax increase on incomes over $1 million a
year from Boehner on Sunday was seen as a step forward with only
14 days left before the automatic fiscal tightening takes
effect, analysts said. 
    Palladium was down 0.6 percent to $696, while
platinum was down 0.6 percent at $1,605 an ounce.
 2:56 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT 
               SETTLE   CHNG  CHNG                       VOL 
 US Gold FEB   1698.20   1.20   0.1  1687.50 1701.00   84,087 
 US Silver MAR   32.28 -0.019  -0.1   32.080  32.485   26,171 
 US Plat JAN   1608.50  -6.00  -0.4  1604.00 1621.00    6,889 
 US Pall MAR    698.30  -3.75  -0.5   695.05  705.20    2,188 
                                                               
 Gold          1696.04   0.95   0.1  1686.54 1699.51         
 Silver         32.160  0.010   0.0   32.050  32.400 
 Platinum      1605.00  -9.00  -0.6  1606.50 1618.00 
 Palladium      696.00  -4.00  -0.6   696.00  702.00 
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY 
               CURRENT   30D AVG  250D AVG   CURRENT     CHG 
 US Gold         89,566   191,379   173,331     12.93    0.19 
 US Silver       27,948    61,747    52,524        21   -1.80 
 US Platinum      8,869     9,673     8,967     17.48   -0.24 
 US Palladium     2,223     6,217     4,778                  
                                                               
    

 (Additional reporting by David Brough in London and Rujun Shen
in Singapore; editing by Sofina Mirza-Reid)