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Gold futures edge higher as investors eye fiscal cliff talks

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Investing.com - Investing.com - Gold futures edged higher during European morning trade on Tuesday, as market players continued to monitor negotiations among 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 traded at USD1,702.85 a troy ounce during European morning trade, up 0.3% on the day.

Prices rose by as much as 0.4% earlier in the day to trade at a daily high of USD1,704.35 a troy ounce, the strongest level since December 13.

Gold prices were likely to find short-term support at USD1,687.75 a troy ounce, Monday's low and resistance at USD1,711.15, the high from December 13.

Investors continued to monitor 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 a divided Congress and the White House can work out a compromise in the two weeks left before the deadline.

Late Monday, President Barack Obama made a counter-offer to avert the crisis. The White House's latest proposal included a major change in position on tax hikes for the wealthy, moving closer to the Republicans' position.

President Obama said recently that any solution must include spending cuts and raising revenue, including increasing taxes on the wealthiest. Republican leaders say they will agree to higher revenue, but they want to close loopholes or reduce tax breaks rather than raise rates.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was flat near Monday's two-month low, boosting the appeal of dollar-denominated commodities.

Elsewhere on the Comex, silver for March delivery rose 0.8% to trade at USD32.53 a troy ounce, while copper for March delivery added 0.2% to trade at USD3.674 a pound.

Trading was expected to remain subdued over the next few weeks, with year-end positioning driving flows and as holidays in many countries limit activity.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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