* Spot gold to hover below $1,738 or retrace - technicals
* Indian c.bank asks banks to restrict financing of gold
* Holdings of SPDR Gold fall
By David Brough
LONDON, Nov 20 Gold steadied around $1,733 an
ounce on Tuesday, following its biggest one-day rise in two
weeks, supported by hopes the United States will resolve its
fiscal problems and by buying in response to the Middle East
Spot gold was up 0.12 percent at $1,733.56 an ounce
by 1325 GMT, after rising more than 1 percent on Monday.
U.S. gold traded down 0.03 percent at $1,733.80.
Gold was supported by expectations that U.S. lawmakers would
reach a deal to avert automatic tax hikes and spending cuts in
early 2013, which could otherwise trigger another recession.
"Gold is acting more like a risk asset," Daniel Brebner,
analyst with Deutsche Bank, said, referring to gold's role as a
risky investment, like other commodities, that tend to rise when
dangers like that posed by the U.S. "fiscal cliff" are averted.
Easing risks over Greece's debt crisis also underpinned gold
prices, Brebner said.
Athens approved laws on Monday to enforce budget targets and
ensure privatisation proceeds are used to pay off debt, seeking
to appease foreign lenders before a critical meeting of euro
zone finance ministers.
MIDDLE EAST CONFLICT
Gold can sometimes also be viewed as a safe haven
investment, especially in times of great uncertainty.
The conflict between Israel and the Gaza Strip supported
gold prices due to concerns over risks the violence could spread
in the region, stoking worries over inflation through the
potential impact on oil prices.
"Geopolitical tensions have always had an impact on gold,"
Ross Norman, chief executive of precious metals trader Sharps
Norman and Brebner saw a potential linkage in oil and gold
prices if the Middle East conflict deepened.
"If the oil market starts to move considerably higher based
on Middle East risks, inflationary pressures would grow, and so
gold could be seen as a way to hedge against inflationary
pressures," Brebner said.
He saw no impact on the gold price from France's rating
downgrade by Moody's, saying it had been priced into the market.
World shares and the euro steadied on Tuesday after an
initial fall in reaction to France losing its top-notch credit
rating from Moody's, with shares maintaining sharp gains from
the previous day as investors await a deal for Greece.
Technical analysis suggested spot gold may hover below a
resistance at $1,738 per ounce for one trading session before
breaking this level and rising into a target zone of
$1,746-$1,749, according to Reuters market analyst Wang Tao.
Indian banks have been asked by the Reserve Bank of India to
restrict financing of purchases of gold in the form of bullion,
jewellery and coins or units of exchange traded funds, in the
latest measure to restrict gold imports to counter a ballooning
CITI SEES GOLD AT $1,749/OZ IN 2013
Citi expected gold to rise to an average price of $1,749 an
ounce in 2013 from 2012's $1,679, peaking in the first quarter
(1Q) at close to $1,800, as the improving U.S. economy and a
stronger dollar limit the upside, it said in a research note.
"Gold may see another short-lived bounce in 1Q13 from
further Fed action to replace the ending OT2 (Operation Twist),
but signs of fatigue are increasingly apparent," the report
The Fed's Operation Twist stimulus programme extends the
maturity of the central bank's Treasuries holdings in a bid to
lower mortgage rates and other long-term borrowing costs.
Citi forecast silver to average $31 next year, down from
this year's $31.30, and to further decline to $26.50 in 2014, as
the demand picture is expected to remain slow while supply may
continue to rise.
Spot silver inched up 0.15 percent to $33.15 an
ounce, after rising 2.5 percent in the previous session.
Holdings of the largest gold-backed exchange-traded-fund
(ETF), New York's SPDR Gold Trust, fell 0.03 percent on
Monday from Friday, while those of the largest silver-backed
ETF, New York's iShares Silver Trust fell 0.45 percent on
Friday from Thursday.
Platinum inched up 0.3 percent to $1,575.5, while
sister metal palladium was last at $640.2, up 0.5