Investing.com - Gold futures ended Friday's session lower, as
investors turned to the relative safety of the U.S. dollar amid
ongoing uncertainty surrounding talks between U.S. lawmakers to
avoid the looming fiscal cliff crisis.
On the Comex division of the New York Mercantile Exchange, gold
futures for February delivery shed 0.45% on Friday to settle the
week at USD1,656.45 a troy ounce.
On the week, gold futures dipped a modest 0.15%, as trading volumes
remained light, with many investors already away on holidays.
Gold prices were likely to find support at USD1,636.45 a troy
ounce, the low from December 21 and resistance at USD1,672.75, the
high from December 20.
Market players remained focused on developments surrounding the
fiscal cliff in the U.S., approximately USD600 billion in automatic
tax hikes and spending cuts due to come into effect on January 1
unless Democrats and Republicans agree how to cut the deficit.
U.S. President Barack Obama met with congressional leaders at the
White House Friday afternoon, but both sides failed to reach an
agreement ahead of the looming year-end deadline.
The gathering included House Speaker John Boehner and Senate
Minority Leader Mitch McConnell, both Republicans, as well as
Senate Majority Leader Harry Reid and House Minority Leader Nancy
Pelosi, both Democrats.
The House of Representatives is due to return to Washington on
Sunday. The Senate will be in Sunday as well to try to reach a
Without a deal, the U.S. could fall back into recession and drag
much of the world down with it.
Adding to the cautious trade environment, Italy saw borrowing costs
edge higher at an auction of five- and- ten-year government bonds,
amid uncertainty ahead of national elections in February.
Rome sold EUR3 billion of 10-year bonds at an average yield of
4.48%, up from 4.45% last month. The country also auctioned EUR2.87
billion of five-year debt at a yield of 3.26%, compared to 3.23% a
Meanwhile, revised data showed that France's economy grew by a
meager 0.1% in the third quarter, down from an initial estimate for
growth of 0.2%. The euro zone's second largest economy shrank 0.1%
in the second quarter, unchanged from the previous estimate.
The news prompted investors to shun riskier assets, like stocks and
high yielding currencies, and move in to safe-haven assets, such as
the U.S. dollar and Treasurys.
The dollar index, which tracks the performance of the greenback
against a basket of six other major currencies, rose 0.1% Friday to
settle the week at 79.79, the highest level since December 14.
A stronger dollar reduces demand for raw materials as an
alternative investment and makes dollar-priced commodities more
expensive for holders of other currencies.
Despite losing nearly 3.5% in December, gold is still up almost
5.5% for the year, thanks to a rally in the first half of 2012
driven by ultra-low interest rates and aggressive monetary stimulus
from global central banks.
In the week ahead, investors will be eyeing Friday's
highly-anticipated data on U.S. nonfarm payrolls, as investors
attempt to gauge the strength of the country's economic recovery.
Any improvement in the U.S. economy could scale back expectations
for further easing from the Federal Reserve.
Elsewhere on the Comex, silver for March delivery fell 0.65% on
Friday to settle the week at USD30.04 a troy ounce. On the week,
silver futures were little changed.
Meanwhile, copper for March delivery declined 0.4% Friday to close
the week at USD3.588 a pound. Copper prices added 0.66% on the
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