Gold Drops as Some Investors Sell Amid U.S. Budget Negotiations
Gold fell for the first time in five days as some investors sold the metal amid negotiations between U.S. lawmakers to strike a budget deal before the year-end.
Spot gold lost as much as 0.4 percent to $1,653.55 an ounce and was at $1,657.80 at 3:15 p.m. in Singapore. Bullion is 6 percent higher this year, set for a 12th annual gain, as investors sought the metal as a protection of wealth after central banks around the world took steps to stimulate economies.
President Barack Obama and Congress return to Washington today and have five days to reach a deal to avert more than $600 billion in automatic spending cuts and tax increases from Jan. 1, known as the fiscal cliff. Treasury Secretary Timothy F. Geithner said he will take “extraordinary measures” to postpone a U.S. default into early 2013 amid the stalled talks.
“Progress on the fiscal cliff will continue to affect market sentiment,” said Feng Liang, an analyst at GF Futures Co., a unit of China’s third-biggest listed brokerage. “Gold’s one of the few investments with positive returns this year and it’s normal to get some” selling at the year-end, Feng said.
Gold for February delivery dropped 0.1 percent to $1,658.40 an ounce on the Comex. Cash bullion of 99.99 percent purity slid 0.1 percent to 332.95 yuan a gram ($1,660.27 an ounce) on the Shanghai Gold Exchange, while metal for June delivery on the Shanghai Futures Exchange rose 0.2 percent to 337.89 yuan a gram.
Cash silver was little changed at $30.0088 an ounce, after swinging between gains and losses. The metal has climbed 7.8 percent in 2012 as holdings in exchange-traded products rose 9.4 percent this year to a record 18,915.13 metric tons yesterday.
Spot platinum, the best performing precious metal in 2012, was little changed at $1,538.62 an ounce, up 9.8 percent this year. Palladium was also little changed at $693 an ounce, 5.8 percent higher this year.
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