* Dollar index holds near two-month high, weighing on gold
* Spot gold neutral in $1,702-$1,734/oz range - technicals
* Coming up: ECB rate decision; 1245 GMT
(Adds comments; updates prices)
By Rujun Shen
SINGAPORE, Nov 8 Gold traded little changed on
Thursday below the 2-1/2-week high hit in the previous session
after U.S. President Barack Obama was re-elected, as a strong
dollar largely put off buyers.
Obama's re-election gave markets a boost by ending weeks of
political uncertainty, but now investors have shifted their
focus to the "fiscal cliff" looming over the world's biggest
economy: nearly $600 billion tax hikes and spending cuts which,
if left unchanged, will begin in early 2013 and possibly push
the fragile U.S. economy into deep recession.
Worries about the fiscal cliff are supportive of safe-haven
gold, but a strong dollar, which hit a two-month high against a
basket of major currencies in the previous session, curbed
bullion's gains by making it more expensive for buyers holding
"The dollar serves as a barometer of overall global risk,"
said Jeremy Friesen, commodity strategist at Societe Generale in
"Now the global risk has moved to centre on the U.S. and
what it means for that barometer becomes a little messy and hard
to tell. The dollar should weaken as the Fed offsets any
slowdown, which I expect to be the end result, but in the near
term if the market is nervous, it will bid up the dollar."
Spot gold was little changed at $1,717.79 an ounce by
0742 GMT, after rising to a 2-1/2 week high of $1,731.40 in the
U.S. gold inched up 0.3 percent to $1,718.30.
Technical analysis suggested that spot gold looks neutral in
the range of $1,702-$1,734 an ounce during the day, said Reuters
market analyst Wang Tao.
Investors are now awaiting results of a European Central
Bank policy meeting. The bank is expected to leave interest
rates unchanged, even as the latest data showed a slowdown in
Germany's manufacturing sector.
The lingering euro zone debt crisis and worries about the
U.S. fiscal problems kept investors interested in gold.
Holdings of SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose to 1,337.205 tonnes by
Nov. 7, its second-highest level after the all-time high of
1,340.521 tonnes hit in early October.
But buying slowed in Asia's physical gold market, as prices
have risen more than 2 percent this week.
"No one is buying at this level, as people have bought a lot
when prices dipped below $1,700," a Hong Kong-based gold dealer
Precious metals prices 0742 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1717.79 1.48 +0.09 9.85
Spot Silver 31.83 0.07 +0.22 14.95
Spot Platinum 1537.24 -1.75 -0.11 10.35
Spot Palladium 605.47 -4.00 -0.66 -7.21
COMEX GOLD DEC2 1718.30 4.30 +0.25 9.67 12680
COMEX SILVER DEC2 31.84 0.18 +0.57 14.06 5664
COMEX gold and silver contracts show the most active months
(Editing by Himani Sarkar)