* Markets watch U.S. debt ceiling
* Gold importers in India pause on fresh purchases
* China data shows economic recovery gains pace
By David Brough
LONDON, Nov 9 Gold hit a three-week high on
Friday, boosted by expectations U.S. monetary policy would
remain loose after President Barack Obama's re-election and a
looming "fiscal cliff" that could slash U.S. public spending.
Since the U.S. elections on Tuesday investors have become
worried that Washington's politicians may struggle to find a
compromise to cut the budget deficit before nearly $600 billion
worth of spending cuts and tax increases kick in early in 2013.
Markets are also watching the debt ceiling, which needs to
be raised to avoid a government shutdown.
Spot gold was at $1,732.09 an ounce by 1150 GMT, up
0.12 percent, having earlier touched a three-week peak of
$1,737.60, while U.S. gold edged up 0.39 percent to
A stronger dollar offset further upside in gold by making
the yellow metal more costly in other currencies.
Gold prices hit a 2-1/2 week high on Wednesday after Obama's
re-election gave markets a boost by ending weeks of political
uncertainty, and since extended gains to the three-week peak as
concerns over the fiscal cliff intensified.
"This is a question of a safe haven bid for gold in times of
economic uncertainty," said Nic Brown, head of commodities
research at Natixis.
"It is a recognition that the negotiations between Obama and
Congress will be difficult. The two political parties come from
diametrically opposed positions on this issue."
Brown said the Obama victory signalled a continuing
environment of relaxed monetary policy, which was likely to
underpin gold prices.
"An Obama victory enhances the likely longevity of ongoing
quantitative easing," he said.
Money printing by central banks boosts gold's appeal as it
keeps interest rates at a low level, reducing the opportunity
cost of holding a metal that has no yield outside its actual
Spot gold XAU= is likely to gain more to $1,749 per ounce,
driven by an upward wave c, according to Reuters market analyst
China's economy strode further along the road of recovery
from its slowest growth in three years, data for October showed
on Friday, as infrastructure investment accelerated and output
from the country's factories ran at its fastest in five months.
China's gold demand is expected to grow 1 percent this year
to a record of around 860 tonnes, Philip Klapwijk, the global
head of metals at consultancy Thomson Reuters GFMS, said this
week, with both jewellery and investment sales rising.
Gold importers in India, the world's biggest buyer of
bullion, paused on fresh purchases ahead of festivals next week,
as a weaker rupee helped the yellow metal hit its highest level
in seven weeks.
The festive season in India will peak with Dhanteras and
Diwali, while the wedding season continues until December.
Spot platinum XPT= traded up 0.86 percent to $1,553.99 an
ounce. Spot palladium XPD= was down 0.08 percent to $611.47 an
Silver fell 0.37 percent to $32.2 an ounce.