Gold steady after sell-off, US talks eyed
London, November 29, 2012
Gold steadied on Thursday to trade in a narrow range, after suffering its biggest daily decline in nearly four weeks in the previous session, as investors nervously eyed a looming deadline for averting a US fiscal crisis.
While gold has been unable to break a heavy resistance at $1,750 an ounce over the past week and briefly plunged to as low as $1,705.64 an ounce on Wednesday, general bullish sentiment for bullion remained intact as indicated by a rise in gold-backed exchange traded funds to a record high.
And the threat of the US economy slipping off the "fiscal cliff" may support the precious metal further, although the strength in the dollar - a more popular safe haven - may take some of gold's lustre off.
US lawmakers are engaged in talks to avert $600 billion worth of tax hikes and spending cuts, or the so-called "fiscal cliff" due to start in the new year that threatens to push the economy back to recession.
House Speaker John Boehner voiced optimism that Republicans could broker a pact with the White House to avoid the fiscal cliff on Wednesday.
"Generally people are still pretty bullish on gold and last night was just a one-off correction, nothing extraordinary," said a Singapore-based trader, adding that $1,650-$1,700 would be a good buying level. But he said Asian physical demand was disappointing.
"We aren't seeing much physical demand, which is quite bad for this time of the year," he said. Spot gold was nearly flat at $1,719.60 an ounce by 0722 GMT, after tumbling 1.3 percent in the previous session due to a heavy bout of stop-loss selling. US gold inched up 0.2 percent to $1,719.70, after
dropping 1.5 percent on Wednesday.
Technical analysis suggested spot gold could retrace to $1,692 an ounce during the day, said Reuters market analyst Wang Tao. - Reuters