* 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, buoyed by expectations U.S. monetary policy will remain
loose after President Barack Obama's re-election and by 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 $1,738.01 an ounce by 1503 GMT, up
0.64 percent, after earlier touching a three-week peak of
$1,738.66, while U.S. gold rose 0.66 percent to
A stronger dollar offset further upside in gold by making
the metal more costly in other currencies.
The euro dropped to a two-month low against the dollar on
Friday and could extend losses as fears mounted that the euro
zone's debt crisis and deteriorating economic conditions could
drag down global economic growth.
Gold prices rose on Wednesday after Obama's re-election gave
markets a boost by ending weeks of uncertainty and has since
extended gains as concerns over the fiscal cliff have
"Wrangling (between Obama and Congress) between now and the
end of the year might underpin gold," William Adams, head of
research at Fastmarkets.com, said.
Nic Brown, head of commodities research at Natixis, said the
Obama victory signalled a continuing environment of relaxed
monetary policy, which was likely to support gold prices.
"An Obama victory enhances the likely longevity of ongoing
quantitative easing," he said.
Standard Bank said in a market note, "In spite of dollar
strength, the market appears to continue to take comfort from
Obama's re-election and the implied support this gives to
continued monetary accommodation from the Fed."
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 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.
Adams said, "If we start to see more economic momentum in
China, that would only be good for consumer buying of jewellery.
People would have more money to invest in gold."
Gold importers in India, the world's biggest buyer of
bullion, paused in making purchases ahead of festivals next week
as a weaker rupee pushed up the gold price for Indian buyers.
The festive season in India will peak with Dhanteras and
Diwali, while the wedding season continues until December.
Spot platinum XPT= traded up 1.57 percent to $1,564.99 an
ounce. Spot palladium XPD= was up 0.08 percent at $612.47 an
Silver rose 1.27 percent to $32.73 an ounce.