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Gold futures steady in pre-holiday trade as cliff talks drag on

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Investing.com - Investing.com - Gold futures were little changed in quiet pre-Christmas trade during U.S. morning hours on Monday, as investors stuck to the sidelines amid growing pessimism a deal to avoid the looming fiscal cliff will be reached by the year-end deadline.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,662.55 a troy ounce during U.S. morning trade, up 0.15% on the day.

Trading on the Comex will close at 12:30EST (17:30GMT) ahead of the Christmas holiday on Tuesday.

Prices held in a tight trading range between USD1,652.75 a troy ounce, the daily low and a session high of USD1,666.45 a troy ounce.

Gold futures tumbled to USD1,636.45 a troy ounce on Friday, the cheapest level since August 22, as a bout of technical selling set in after prices broke below their 200-day moving average, triggering fresh sell orders amid bearish chart signals.

Gold prices were likely to find support at USD1,636.45 a troy ounce, Friday's low and resistance at USD1,672.75, Thursday's high.

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 weeks of the year.

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.

Doubts over whether a deal will be reached ahead of the year-end intensified last week after Republican House Speaker John Boehner failed to get his caucus' support for his so-called "Plan B" fiscal cliff option, which called for tax increases only on Americans earning USD1 million or more per year.

The U.S. House has adjourned for the Christmas holiday, fueling speculation that policymakers will not be able to avert the fiscal cliff.

Without a deal, the U.S. could fall back into recession and drag much of the world down with it.

Elsewhere on the Comex, silver for March delivery shed 0.25% to trade at USD30.12 a troy ounce, while copper for March delivery fell 0.35% to trade at USD3.555 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.

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