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Gold Set for Modest Monthly Gain, Increased Bullion Buying

November 30, 2012 - The gold market steadied on Friday, ready to post a modest gain for the month of November in choppy trading conditions as the market responded in line with stocks and other risk assets to the latest negotiations over the U.S. fiscal cliff crisis.

The spot price of gold was marginally softer at $1,723.91 per troy ounce ready for a 1.6 percent weekly drop and a modest monthly gain around 0.2 percent. U.S. gold futures traded down 0.19 percent to $1,724.00 per troy ounce.

The U.S. dollar hit session highs in strong trade against the euro following data indicated U.S. personal income and consumer spending came in below expectations last month, which hurt risk appetite.

Despite the strong dollar, which generally does not benefit the gold market as it makes gold more expensive for holders of other currencies, demand for gold remained strong with multi-year record sales at the U.S. Mint and the metal is set for a modest 0.2 percent gain in markets on the month.

Peter Fertig, consultant with Quantitative Commodity Research said the U.S. economic data came in a little worse than expected, which is weighing on risky assets, leading to a slight decline in gold.

Bullion recovered from a 1-1/2 week low of $1,705.64 per troy ounce hit on Wednesday during a technically-driven selloff following a significant drop in equities during the prior session. The main driver for the recovery is attributed to continued budget disagreements out of Washington as the U.S. fiscal cliff fast approaches.

Uncertainty over the fiscal cliff is regarded as beneficial to the gold market because the uncertainty it generates contributes to safe-haven asset demand and a move into gold. Negotiations on Friday showed less progress and more division than the rhetoric from a week ago as the President and Democrats in Congress seek to consolidate their winnings from the recent elections.

Meanwhile, another 11,000 ounces of American Eagle Gold coins sold at the U.S. Mint on Thursday, bringing November sales totals to 131,000 ounces, the highest level for a monthly total since January 2011 when sales reached 133,500 ounces. Physical buying on dips exhibits a decoupling of investors demand from current market dynamics, to some extent.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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