Investing.com - Gold futures were higher during European morning hours on Monday, as investors continued to monitor negotiations among U.S. lawmakers to avoid going over the "fiscal cliff" ahead of the looming January 1 deadline.
Trading was expected to remain subdued, with year-end positioning driving flows and as holidays in many countries limit activity.
Lower-than-usual volumes could spark volatile trading, resulting in rapid changes in metal prices during the final trading day of the year.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,666.75 a troy ounce during European morning trade, up 0.65% on the day.
Prices rose by as much as 0.65% earlier in the session to hit a daily high of USD1,666.75 a troy ounce.
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.
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.
Senate Majority Leader Harry Reid said the Senate would resume sitting on Monday to continue discussions, but there were still significant differences between the two sides.
Without a deal, the U.S. could fall back into recession and drag much of the world down with it.
Despite losing nearly 3.5% in December, gold is still up almost 5.5% for the year, its 12th consecutive year of gains, 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 rose 0.85% to trade at USD30.23 a troy ounce, while copper for March delivery added 0.65% to trade at USD3.614 a pound.
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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.