* Gold to drop to $1,702.59-technicals
* Coming Up: U.S. Weekly jobless claims; 1330 GMT
(Adds prices, WGC's Q3 demand figures)
By Lewa Pardomuan
SINGAPORE, Nov 15 Gold slipped on Thursday as
share prices fell, but tensions in the Middle East and worries
about the U.S. "fiscal cliff" are expected to boost the metal's
safe-haven appeal and spur buying from investors.
The so-called fiscal cliff - a combination of government
spending cuts and tax rises due to go into effect in early 2013
unless Congress acts - could reduce the U.S. budget deficit but
may also tip the economy back into recession.
Gold fell $3.01 an ounce to $1.723.04 by 0701 GMT.
It rallied to a three-week peak of around $1,738 on Friday, when
investors bought the metal on expectations U.S. monetary policy
will remain loose after President Barack Obama's re-election.
"I'd rather look at the upside than the downside. I think
people are basically bullish," said Yuichi Ikemizu, branch
manager for Standard Bank in Tokyo, citing hopes the United
States will sustain its quantitative easing strategy.
U.S. gold for December lost $6.60 an ounce to
Global gold demand dropped 11 percent in the three months to
September from record levels seen in the same period last year,
dampened mainly by fading Chinese fervour as its economy slowed,
with stronger Indian demand stemming a larger fall, the World
Gold Council said.
However, bullion demand to back gold exchange-traded funds -
which issue securities backed by physical metal - jumped to 136
tonnes in the third quarter from 87.4 tonnes a year ago.
"Against a backdrop of continued global economic uncertainty
and elections in China and the U.S., it is clear from five-year
rising demand trends that gold's fundamental property as a
vehicle for capital preservation continues to endure...," said
managing director of investment research Marcus Grubb.
China's president-in-waiting Xi Jinping won a strong mandate
on Thursday to lead the world's No.2 economy and deal with
problems ranging from corruption to economic uncertainty.
In other markets, the euro rebounded from a 2-month
low on Thursday, while stocks mostly fell as investors reacted
to the prospect of drawn-out negotiations over the looming U.S.
Obama said on Wednesday that Republicans would have to agree
to raise taxes on the wealthy as the first step in a budget deal
that would prevent a dysfunctional Washington from pushing the
economy into recession.
Gold sometimes tracks stock markets as a drop in equities
prompts investors to sell bullion to cover losses.
Bullion, however, found some support as tensions in the
Middle East escalated after Israeli strikes against the Gaza
Strip. Brent oil prices were steady above $109 per barrel.
"I think sentiment is still bullish because of the tension
in the Middle East and also the fiscal cliff. I think the market
is looking to touch $1,750, while the downside is $1,720," said
a dealer in Hong Kong.
"I don't think we are going to break $1,700, unless of
course there's a strong rally in the dollar."
The U.N. Security Council will hold a closed emergency
meeting on Wednesday night to discuss Israeli strikes against
the Gaza Strip as Israel threatened a wider offensive in the
Palestinian enclave to stem rocket salvoes by Hamas militants.
Participants in an annual gathering of the London Bullion
Metal Association on Tuesday expected gold to reach $1,843 an
ounce by September 2013, and forecast silver to reach $38.40.
Precious metals prices 0701 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1723.04 -3.01 -0.17 10.18
Spot Silver 32.58 -0.07 -0.21 17.66
Spot Platinum 1577.00 -5.99 -0.38 13.21
Spot Palladium 629.47 -3.93 -0.62 -3.53
COMEX GOLD DEC2 1723.50 -6.60 -0.38 10.00 13165
COMEX SILVER DEC2 32.59 -0.29 -0.88 16.75 3460
COMEX gold and silver contracts show the most active months
(Editing by Miral Fahmy and Himani Sarkar)