* Targets $1,397-$1,447 range in 3 mths -technicals
* U.S. poised to go off fiscal cliff - Senator Reid
* India gold demand firm as jewellers stock up
By David Brough
LONDON, Dec 27 Gold extended losses slightly
after positive U.S. jobs data on Thursday, and stayed in sight
of last week's four-month lows as investors focused on talks to
prevent the U.S. economy from plunging into recession.
The number of Americans filing new claims for unemployment
aid fell last week to nearly its lowest level in 4 1/2 years, a
possible sign that employers have picked up the pace of hiring.
"The effect the jobs data had on gold was via a firming of
the dollar," said Ross Norman, chief executive of precious
metals trader Sharps Pixley.
Gold extended losses briefly after the U.S. jobs
data, and was down $4.73 an ounce to $1,654.76 by 1518 GMT. It
has come off a 4-month low of $1,635.09 struck last Thursday,
but remains well below a record high of around $1,920 hit in
U.S. gold for February fell 0.32 percent to
$1,655.40 an ounce.
Favourable U.S. economic data could signal prospects for an
end to the ultra-loose monetary policy that has supported gold
"The better the data the more the fear that monetary easing
will ultimately come to an end," said Credit Suisse analyst
"Every time there is this fear that monetary easing may not
be continued to the extent that was previously expected there
can always be a little bit of selling pressure."
Gold prices have benefited from the loose monetary policy of
leading central banks because of gold's appeal as a hedge
against inflationary fears.
Gold investors kept a close eye on talks to avert a fiscal
crisis in the United States.
President Barack Obama was flying back to Washington on
Thursday and the top Republican in Congress planned to speak
with House of Representatives lawmakers as the clock ticked
toward a year-end deadline for action to avert the looming
"fiscal cliff" tax hikes and spending cuts.
The United States faces $109 billion in across-the-board
spending cuts starting in January unless a deal is reached to
either replace or delay them. Democrats want to switch the
spending cuts to tax increases for the most part.
"If the politicians reach an agreement on the fiscal cliff,
the dollar could suffer and there could be more investment into
gold," said Afshin Nabavi, head of trading at MKS Finance,
referring to gold's behaviour as a risk asset similar to shares.
He said he expected gold to trade in a range of $1,650-1,670
per ounce in the near term.
A failure in the fiscal talks could spur safe-haven buying,
Senate Majority Leader Harry Reid on Thursday criticized
Republicans in Congress for refusing to go along with any tax
increases as part of a fiscal cliff remedy as he sketched out a
pessimistic outlook for this week.
For the year, bullion is up around 6 percent, on track for a
twelfth straight year of gains on rock-bottom interest rates,
concerns over the financial stability of the euro zone, and
diversification into bullion by central banks.
Spot gold is expected to drop into a range of
$1,397-$1,447 per ounce over the next three months, as indicated
by its wave pattern and a Fibonacci retracement analysis,
according to Reuters market analyst Wang Tao.
In other markets, world shares and the euro edged higher as
U.S. lawmakers prepared to resume negotiations, while the yen
hit a two-year low on the prospect of drastic monetary easing.
Gold demand in India, the world's biggest buyer of the
metal, remained strong on Thursday as jewellers were restocking
for a festival, although retail demand was weak.
Randgold Resources Plc has cut the production
forecast for its troubled Ivory Coast gold mine after a fire
over Christmas at the project's mill.
Silver was down 0.17 percent to $29.92 an ounce,
platinum eased 0.48 percent to $1,525.75 and palladium
rose 2.3 percent to $705.47 an ounce.