Gold Near Lowest Since August as U.S. Impasse Counters Holdings

Gold traded near the lowest level since August as an impasse in U.S. budget talks helped to boost the dollar, countering investor holdings in exchange-traded products at an all-time high.

Spot gold was little changed at $1,667.95 an ounce at 2 p.m. in Singapore after dropping 0.2 percent yesterday and falling to $1,661.10 on Dec. 18, the lowest since Aug. 31, on signs of progress in the U.S. negotiations. Gold for February delivery was at $1,668.40 an ounce from $1,667.70 on the Comex.

Officials in President Barack Obama’s administration told leaders of business and financial-services groups that talks with House Speaker John Boehner have deteriorated in the past 24 hours, a person familiar with the meeting said. Lawmakers are negotiating to avert more than $600 billion in automatic tax rises and spending cuts set to start in January, known as the fiscal cliff. The Dollar Index snapped a four-day decline.

“We’ve had a few violent moves towards the downside,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “Looking into 2013, we still feel confident about prices eventually moving higher,” he said, citing prospects for increased ETP demand, central-bank buying and a weaker dollar next year.

Holdings in ETPs climbed 12 percent this year to 2,631.794 metric tons yesterday, data compiled by Bloomberg show. Bullion has advanced 6.7 percent this year, set for a 12th annual gain, as central banks around the world added to stimulus.

Cash silver rose as much as 0.5 percent to $31.20 an ounce, and was at $31.0838. The metal, which has risen 12 percent this year, may rally to $40.25 in 2013, based on the median of 49 analyst, trader and investor estimates compiled by Bloomberg.

Spot platinum was little changed at $1,591.39 an ounce after falling for the past three days. The best performing precious metal this year, up 14 percent, hit a two-week low of $1,584 earlier. Palladium fell 0.5 percent to $691.50 an ounce.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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