* U.S. fiscal crisis worries weigh
* COMEX open interest hovers near 2012 high after Fri. rally
* Gold, outside markets ignore Greek aid agreement news
* Coming up: US new home sales, Fed's Beige Book Wednesday
(Adds markets details, graphic link, updates prices)
By Frank Tang
NEW YORK, Nov 27 Gold fell on Tuesday for a
second session as U.S. fiscal worries overshadowed progress in
easing Greece's debt burden, and a key option expiration held
bullion prices in a tight range.
Safe-haven demand for gold faded after euro zone finance
ministers and the International Monetary Fund agreed to reduce
Greece's debt, paving the way for the release of aid loans.
Still, open interest in U.S. gold futures remained near a
2012 high following Friday's price rally. Analysts said these
new bullish positions could help extend the rally.
Gold prices have gravitated toward $1,750 an ounce due to
heavy trading of call and put options around that option strike
level, brokers said. COMEX December option expiration is Tuesday
after market close.
"We believe gold and silver prices will tend towards
consolidation, as investors await further developments on the
U.S. fiscal cliff negotiations," said James Steel, metal analyst
Fears of $600 billion in automatic cuts in government
spending and tax increases early next year have decreased gold's
inflation-hedge appeal. Some worry the tax hikes and spending
cuts could tip the U.S. economy into another recession.
Gold investors were cautious as the U.S. Congress crept
toward compromise on taxes and spending, but a firm deal to
avert the fiscal cliff seemed far off.
Spot gold was down 0.4 percent at $1,741.86 an ounce
by 2:44 p.m. EST (1944 GMT), below a five-week high of $1,754.10
reached on Friday.
U.S. COMEX gold futures for December delivery settled
down $7.30 at $1,742.30.
Trading volume was more than 50 percent above the 250-day
average largely due to a combination of option expiry and
contract rollover ahead of first-notice day Friday.
Heavy buying of $1,700 COMEX January put options also
indicates some investors are looking for protection near the
year end, options traders said.
(January option positioning: link.reuters.com/cym34t)
Open interest eased but stayed near a 2012 high at 493,245
lots reached Friday when gold jumped 1.5 percent.
"Rising open interest on a sharply higher price means
that this was very real buying rather than short covering," said
Dennis Gartman, a veteran trader and the publisher of the
US FISCAL CRISIS WEIGHS
Gold ignored positive U.S. economic news. A gauge of planned
U.S. business spending in October rose by the most in five
Among other precious metals, silver was down 0.4
percent at $33.98 an ounce. Platinum was unchanged from
Monday's last trade at $1,608.74 an ounce, while palladium
climbed 0.7 percent to $665.25 an ounce.
2:44 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1742.30 -7.30 -0.4 1741.20 1751.90 170,321
US Silver DEC 33.981 -0.156 -0.5 33.910 34.275 57,292
US Plat JAN 1618.50 7.50 0.5 1611.10 1623.00 5,227
US Pall DEC 668.20 7.00 1.1 663.05 672.30 6,995
Gold 1741.86 -6.63 -0.4 1742.03 1751.40
Silver 33.980 -0.130 -0.4 33.950 34.260
Platinum 1608.74 0.00 0.0 1613.50 1618.00
Palladium 665.25 4.78 0.7 665.20 670.25
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 266,868 160,614 175,875 12.96 -0.21
US Silver 91,644 47,926 56,206 21.2 0.18
US Platinum 5,426 8,739 9,483 18.28 0.35
US Palladium 12,390 4,705 4,610
(Additional reporting by Jan Harvey and David Brough in London,
Graphic by Jan Harvey; Editing by Peter Galloway)