* U.S. budget battles loom after "fiscal cliff" deal
* Gold to consolidate in $1,673-$1,696 range
* Coming Up: U.S. Jobless claims weekly; 1330 GMT
(Updates prices, adds Credit Suisse forecast)
By Lewa Pardomuan
SINGAPORE, Jan 3 Gold inched up on Thursday,
holding near its highest level in two weeks hit in the previous
session following a last-minute deal to avert a U.S. fiscal
disaster, although caution remained over upcoming tough budget
Commodities made a strong start to the new year by hitting
multi-week highs on Wednesday after the U.S. Congress passed a
bill that raises taxes on wealthy individuals and families,
sparing middle- and low-income earners.
But it left unresolved another sticky issue involving $109
billion in planned military and domestic spending cuts,
promising more political showdowns on the budget in coming
Gold typically benefits from economic uncertainties given
its safe-haven status, but considering many investors have both
equities and gold in their portfolios, bullion has also been
closely watching movements in stock markets that have rallied on
the U.S. fiscal deal.
Gold hit a high around $1,689 an ounce and was at
$1,687.70 by 0646 GMT, up $1.35. It touched a two-week high
above $1,690 in the previous session. Gold ended up around 7
percent in 2012 - the 12th straight year of gains, making it one
of the longest bull runs ever for a commodity.
"Precious metals are currently tracking equities, however
they are stuck within the next trading range. For gold, it will
need to breach $1,695 before it can actually have another upward
trend to break above $1,700," said Brian Lan, managing director
of GoldSilver Central Pte Ltd in Singapore.
"For silver, it has to break $31.60."
U.S. gold for February was almost flat at $1,688.30
SUPPLY YET TO RECOVER, INDIAN BUYERS ON SIDELINES
Premiums for gold bars were steady in Singapore at $1.10 to
$1.20 an ounce to the spot London prices as supply had yet to
recover after the Christmas and New Year holidays. Buyers from
top consumer India were on the sidelines.
India's central bank has asked that volume and value
restrictions be placed on gold imports by banks and agencies,
while the finance minister said he was looking at further curbs
on gold imports to help rein in a current account gap that
touched an all-time high in the July-September quarter.
"People in India, especially the jewellers, will be making
noise because the move may affect them. But of course, if you
keep importing gold, you will need a lot of dollars. This
restriction has happened in Vietnam and Thailand," a dealer in
"But the good thing about Thailand is that it both imports
and exports gold. So, there is a balance."
India imported a record 967 tonnes of gold in 2011.
SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.07 percent to
1349.92 tonnes on Wednesday from 1350.82 tonnes on Monday.
Precious metals prices 0646 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1687.70 1.35 +0.08 0.79
Spot Silver 31.07 0.10 +0.32 2.61
Spot Platinum 1567.49 6.99 +0.45 2.12
Spot Palladium 704.47 2.10 +0.30 1.80
COMEX GOLD FEB3 1688.30 -0.50 -0.03 0.75 9036
COMEX SILVER MAR3 31.11 0.10 +0.33 2.91 2221
(Editing by Himani Sarkar)