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Gold futures steady in holiday-thinned trade with cliff talks in focus

Published 12/26/2012, 04:29 AM
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Investing.com - Gold futures were steady in post-Christmas Day trade on Wednesday, with trading expected to remain subdued as holidays in many countries limit activity.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,659.25 a troy ounce during European morning trade, little changed on the day.

Prices held in a tight trading range between USD1,651.40 a troy ounce, the daily low and a session high of USD1,660.05 a troy ounce.

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.

President Barack Obama plans to return early from his vacation to Hawaii on Wednesday in order to take part in talks to avert the crisis ahead of the year-end deadline, the White House said late Tuesday.

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

Gold prices tumbled to a four-month low of USD1,636.45 a troy ounce late last week, 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.

Despite losing nearly 4% in December, gold is still up almost 5.5% for the year. It is also set for a 12th straight 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.

Elsewhere on the Comex, silver for March delivery rose 0.35% to trade at USD29.99 a troy ounce, while copper for March delivery added 0.6% to trade at USD3.568 a pound.

Volumes were expected to remain light, with year-end positioning and profit-taking driving flows. Lower-than-usual volumes could spark volatile trading, resulting in rapid changes in metal prices during the final weeks of the year.

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