PRECIOUS-Gold eases but on track for first weekly gain this month

Fri Dec 28, 2012 2:19am EST

* Targets $1,397-$1,447 range in 3 mths -technicals
 
    * Coming Up: U.S. CFTC commitment of traders data; 1930 GMT

 (Updates prices)
    By Lewa Pardomuan
    SINGAPORE, Dec 28 (Reuters) - Gold gave up early gains and
ticked down on Friday ahead of talks to prevent the United
States from plunging off a "fiscal cliff" of tax increases and
spending cuts, but prices remained on track for their first
weekly gain in a month.
    Failure to clinch a deal in the U.S. would likely spur
safe-haven buying of bullion, but since many investors have both
equities and gold in their portfolios, the metal may also track
stock markets higher if the White House and Congress finally
reach an agreement.  
    Gold fell $1.58 to $1,661.71 an ounce by 0649 GMT
after rising to as high as $1,665.99. For the year, gold is up
around 6 percent, but well below a record of around $1,920 hit
in September 2011, when a worsening debt crisis in Europe
sparked a buying rush.
     "We do expect a ... deal to happen at the last minute, but
it will be a minimal deal," said Dominic Schnider, an analyst at
UBS Wealth Management in Singapore. "I think that should be gold
supportive." 
    President Barack Obama will meet congressional leaders at
the White House on Friday to try to revive negotiations to avoid
tax hikes and spending cuts - together worth $600 billion - that
will begin to take effect on Jan. 1. 
    Even a partial agreement on taxes that would leave tougher
issues like entitlement reform and the debt ceiling until later
could be enough to keep markets calm. 
    U.S. gold for February eased $1.20 an ounce to
$1,662.50. 
    
    In other markets, the yen fell to its lowest level in more
than two years on Friday, lifting Japanese stocks to 21-month
highs on expectations of drastic monetary easing, while shares
in the rest of Asia rose as Washington races to avoid a fiscal
crisis.  
    The euro held steady against the dollar at $1.3243 
with investors waiting to see whether a last-chance round of
U.S. budget talks will achieve a deal. 
    Gold is traditionally a safe-haven and inflation hedge that
investors rush to in times of trouble, but it has lately behaved
like any risk asset. The precious metal sometimes rises and
falls with the stock market and even follows movements of the
dollar.
    Gold is heading for a 12th straight year of gains on
rock-bottom interest rates, concerns over the financial
stability of the euro zone, and diversification into bullion by
central banks.
    Global gold demand in 2013 should be led by further strength
in Chinese demand and a recovery in India, helping the precious
metal continue its bull run into its 13th year, the
industry-backed World Gold Council has said. 
    Premiums for gold bars were unchanged in Singapore at $1.0
to $1.20 an ounce to spot London prices.    
    "Of course there's some buying but you don't see heavy
activity. Indonesia is pretty quiet, which is partly because
there are not many stocks available in the market," said a
physical dealer in Singapore.
    "India hasn't been very active for some time," said the
dealer, referring to the world's main gold consumer.       
  Precious metals prices 0649 GMT
  Metal             Last    Change  Pct chg  YTD pct chg  Volume
  Spot Gold        1661.71   -1.58   -0.09      6.26
  Spot Silver        30.19    0.03   +0.10      9.03
  Spot Platinum    1532.49    2.00   +0.13     10.01
  Spot Palladium    707.06    0.81   +0.11      8.36
  COMEX GOLD FEB3  1662.50   -1.20   -0.07      6.11       15052
  COMEX SILVER MAR3  30.25    0.01   +0.02      8.35        2078
  Euro/Dollar       1.3245
  Dollar/Yen         86.43
  

 (Editing by Joseph Radford and Himani Sarkar)
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