PRECIOUS-Gold rises on worries over U.S. budget talks

Wed Sep 25, 2013 5:04pm EDT

* Concerns over possible U.S. government shutdown help
    * CFTC ends silver-fixing probe, market reactions minimal
    * Asian physical demand soft -dealers
    * Coming up: U.S. PCE price index, pending home sales Thurs

 (Adds trader comment, second byline, updates market activity)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Sept 25 (Reuters) - Gold rose almost 1
percent on Wednesday, boosted by some safe- haven buying caused
by uncertainty over U.S. budget talks.
    The U.S. Congress, struggling to avert a government shutdown
next week, turned its attention Wednesday to the other fiscal
bullet coming at it: a federal debt default.
    Republican leaders in the House of Representatives notified
members that a vote on raising the debt limit could come as
early as Friday. The uncertain outcome of the budget talks sent
U.S. Treasury bonds prices higher while U.S. equities fell.
 
    Gold rose to a record $1,920 an ounce in September 2011,
partly on fears over the first U.S. debt ceiling crisis, which
confronted investors with the possibility that the world's
biggest economy would be unable to pay interest on its debt.
    "We do not envisage the gold market to revisit the same
euphoria seen during the debt ceiling crisis in mid-2011.
Nonetheless, U.S. debt ceiling concerns would still be viewed as
positive for bullion," said James Steel, chief precious metals
analyst at HSBC.
    Spot gold was up 0.8 percent at $1,332.60 per ounce
at 4:03 p.m. EDT (2003 GMT). 
    The U.S. Comex gold contract for December delivery 
settled up $19.90 at $1,336.20 an ounce. Trading volume was
about 10 percent below the 30-day average, preliminary Reuters
data showed.
    The metal also received a boost from the International
Monetary Fund, which reported that central banks continued to
increase gold reserves in August, with Russia buying nearly 13
tonnes. 
    The price of bullion has fallen about 20 percent this year, 
after 12 years of gains.
   
    U.S. SILVER PROBE ENDS 
    The top U.S. derivatives regulator, the Commodity Futures
Trading Commission, said on Wednesday it closed a five-year
investigation into alleged manipulation of the silver market,
saying 7,000 staff hours of investigation produced no evidence
of wrongdoing. 
    Silver was up 0.4 percent at $21.76 an ounce
    In the physical market, consumers in top markets China and
India appeared to stay on the sidelines with continued
volatility in prices and expectations of further declines,
dealers said.
    China, the second-biggest gold consumer, is headed into a
strong buying season, but market holidays next week for the
National Day have kept things quiet, traders said.
    In India, a fresh bout of buying is expected after new rules
on gold imports and exports are clarified, but buying is
unlikely to return to the strong volumes of the first half of
the year. 
    Among other precious metals, platinum rose 0.3
percent to $1,422.49 an ounce and palladium gained 0.4
percent to $720.22 an ounce.
 4:03 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1336.20  19.90   1.5  1316.60 1338.30  134,378
 US Silver DEC  21.886  0.300   1.4   21.490  21.960   37,535
 US Plat OCT   1428.80  10.00   0.7  1422.50 1436.10   14,194
 US Pall DEC    725.70   5.70   0.8   717.40  726.30    2,621
                                                               
 Gold          1332.60  10.01   0.8  1317.25 1337.90         
 Silver         21.760  0.080   0.4   21.490  21.920
 Platinum      1422.49   4.19   0.3  1426.50 1432.50
 Palladium      720.22   3.22   0.4   719.25  723.25
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        145,449   165,481   180,276     26.89    1.39
 US Silver       39,896    65,668    57,847      34.9   -0.22
 US Platinum     24,797    12,314    12,446      20.5    0.00
 US Palladium     2,641     6,741     5,903                  
                                                               
    

 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Jason Neely and Steve Orlofsky)