December 14, 2012 / 4:20 AM / 5 years ago

PRECIOUS-Gold heads for 3rd weekly drop; US budget talks eyed

4 Min Read

* Silver heads for longest stretch of weekly losses since
May
    * Physical buying interest light, jewellers hope for lower
prices
    * Coming up: U.S. industrial output, Nov; 1415 GMT

 (Adds details; updates prices)
    By Rujun Shen
    SINGAPORE, Dec 14 (Reuters) - Gold struggled to rise above
$1,700 an ounce on Friday and prices headed for their third
consecutive weekly drop, as investors cautiously watched U.S.
talks to avoid a looming fiscal calamity that have so far made
little progress.
    U.S. President Barack Obama and House of Representatives 
Speaker John Boehner met on Thursday as frustration mounted over
the stalemate in negotiations on the "fiscal cliff" -- $600
billion worth of tax hikes and spending cuts that kick in early
next year and threaten to push the economy into recession.
 
    Spot gold inched up 0.1 percent to $1,698.44 an ounce
by 0727 GMT, after an almost 1 percent drop on Thursday. Prices
were headed for a 0.3-percent weekly drop.
    U.S. gold edged up 0.2 percent to $1,700.30.
    The thinning liquidity before the year end contributed to a
lack of momentum in the market.
    "It is hard to glean a real trend as everyone has closed
down for the year," said a Sydney-based trader, adding that the
sell-off on Thursday was a result of position liquidation by
funds to lock in profit for the year.
    Spot gold is on track for a twelfth straight year of gains,
boosted by stimulus measures from central banks that have driven
investors to the safety of bullion amid worries rampant cash
printing will make paper money worthless. 
    The Fed announced more bond buying earlier this week, but
raised concerns about the scope of the measure by linking its
monetary policy to unemployment, which fell to a near four-year
low of 7.7 percent even though the improving number was the
result of a lower number of job-seekers.
   
    Gold was little inspired by encouraging manufacturing data
out of China which added to evidence of a pick-up in the world's
second-largest economy, sending China's stock soaring and
underpinning risk appetite. 
    In Asia's physical bullion market, there was light buying,
but the price decline failed to trigger more interest, dealers
said.
    "Jewellers are not keen to buy at this level," said a
Singapore-based dealer. "They think if we can break below
$1,700, there is probably more room on the down side."
    In other precious metals, spot palladium rose 0.7
percent to $693.70, headed for a 0.3-percent fall from a week
earlier, snapping a six-week winning streak.
    Spot silver was up 0.3 percent to $32.62, rebounding
from a near one-month low of $32.21 hit in the previous session.
The metal was also headed for a third straight weekly fall, its
longest stretch of weekly losses in nearly seven months.    
 
 Precious metals prices 0727 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1698.44    1.75   +0.10      8.61
  Spot Silver        32.62    0.11   +0.34     17.80
  Spot Platinum    1613.99    2.50   +0.16     15.86
  Spot Palladium    693.70    4.70   +0.68      6.31
  COMEX GOLD FEB3  1700.30    3.50   +0.21      8.52        15339
  COMEX SILVER MAR3  32.70    0.34   +1.05     17.12         4516
  Euro/Dollar       1.3105
  Dollar/Yen         83.73
  COMEX gold and silver contracts show the most active months    
   

 (Editing by Himani Sarkar)

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