PRECIOUS-Gold bounces on weak dollar; but near 4-mth low
* Progress in the U.S. fiscal talks dent gold's safe-haven appeal * Gold to range from $1,660-$1,678 -technicals * Coming Up: Housing starts number mm; 1330 GMT (Updates prices, comments) By Lewa Pardomuan SINGAPORE, Dec 19 (Reuters) - Gold regained strength on Wednesday as a weaker U.S. dollar spurred buying from jewellers, but prices were still within sight of an almost four-month low given signs of progress in U.S. fiscal talks that dented bullion's safe-haven appeal. Some investors have shifted into equities as optimism a deal could be reached soon to avert the "fiscal cliff" of tax hikes and spending cuts that threaten to plunge the United States into recession fuelled an appetite for riskier assets. Gold added $6.16 an ounce to $1,675.70 by 0658 GMT after falling to it lowest since August at $1,661.01 in the previous session on technical selling. "We are likely to see some technical buying. Our support level is now at about $1,640. I don't think any further buying will be sustainable," said Lynette Tan, senior investment analyst at Phillip Futures in Singapore. A U.S. deal on the "fiscal cliff" could eventually lift the U.S. dollar and prompt investors to turn to other risk assets such as stocks, hurting demand for gold, she said. "We will see a lack of safe-haven demand." U.S. House of Representatives Majority Leader Eric Cantor said he expects a vote on a Republican offer to avert the "fiscal cliff" on Thursday, and he expects to have enough votes to pass the measure. U.S. gold futures for February rose $6.50 an ounce to $1,677.20. "The gold price has re-visited lows from early November ($1,675 an ounce), representing a possible bottom in a range if this level holds," said Deutsche Bank in a report. "If not, and if more selling pressure is forthcoming, we expect that the gold price could potentially revisit mid-summer lows of $1,600 an ounce." Gold, traditionally an inflation hedge, is on track to drop around 5 percent this quarter, worst since the third quarter of 2008 at the height of the global economic crisis, marked by the bankruptcy filing of Lehman Brothers. But for the year, gold is up around 7 percent and set for a twelfth straight annual growth driven by rock-bottom interest rates, concerns over the financial stability of the euro zone and diversification into bullion by central banks. "We're seeing better demand today, but some customers have also cut their positions after prices fell back below $1,700. Indonesia is a little bit active. Typically, they are quiet," said a physical dealer in Singapore. "The price comes up, yet the Indonesians are buying. Thailand has been buying recently, so I think they are quite long. Premiums are between $1 and $1.10. It's little changed." In other markets, Asian shares and the euro rose to multi-month highs, while the dollar index slipped, making dollar-priced commodities cheaper for holders of other currencies. Precious metals prices 0658 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1675.70 6.16 +0.37 7.16 Spot Silver 31.69 0.07 +0.22 14.45 Spot Platinum 1594.49 3.49 +0.22 14.46 Spot Palladium 691.00 4.50 +0.66 5.90 COMEX GOLD FEB3 1677.20 6.50 +0.39 7.05 19453 COMEX SILVER MAR3 31.77 0.10 +0.30 13.79 4481 Euro/Dollar 1.3243 Dollar/Yen 84.30 (Editing by Himani Sarkar)
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