Gold extended losses from its worst week in six months as U.S. budget talks stalled, boosting concern lawmakers will fail to agree on a deal to avoid tax increases and spending cuts.
Gold for immediate delivery lost as much as 0.3 percent to $1,652.20 an ounce and was little changed at $1,657.30 by 12:54 p.m. in Singapore. Prices fell 2.3 percent last week, the biggest loss since the period ended June 22. Bullion for delivery in in February declined 0.2 percent to $1,657 an ounce on the Comex.
House Republican leaders canceled a vote on Speaker John Boehner’s plan to allow higher tax rates for annual income above $1 million last week, sending the dollar higher versus most of its major peers. Americans face more than $600 billion in tax increases and spending cuts, a so-called fiscal cliff, if a deal isn’t reached by year’s end.
“The market’s wondering which way it’s going to go,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “The market through last week was pricing in that it was going to be resolved, that there would be some form of watered down version of the legislation put into place.”
Holdings in exchange-traded products backed by gold stood at 2,630.89 metric tons on Dec. 21, data tracked by Bloomberg show. Holdings have climbed 12 percent this year, according to the data. The Dollar Index was little changed today after advancing 0.5 percent on Dec. 21.
Gold is up 5.9 percent this year, set for a 12th straight annual gain, as central banks from the U.S. to China and Europe took action to prop up economies and expanded bullion reserves.
Bets on a gold rally fell 13 percent to 112,421 contracts, U.S. Commodity Futures Trading Commission data show. Bullish silver wagers dropped to a five-week low of 30,119 contracts.
Silver for immediate delivery rose as much as 0.5 percent to $30.1425 an ounce and traded at $30.0975. Prices dropped 7 percent last week, the worst week since December 2011, trimming this year’s gain to 8.1 percent.
Spot platinum was little changed at $1,538.50 an ounce after dropping as much as 0.4 percent. Prices are up 9.8 percent this year. Palladium rose 0.4 percent to $682.50 an ounce, taking this year’s advance to 4.2 percent.