Gold ticks higher, on track for 12th annual gain

Dec 31 2012, 13:12 IST
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Gold ticked up after the euro firmed against the dollar, but wary investors stayed on the sidelines.  (Reuters) Gold ticked up after the euro firmed against the dollar, but wary investors stayed on the sidelines. (Reuters)
SummaryGold ticked up to around $1,663 an ounce on Monday.

Gold ticked up to around $1,663 an ounce on Monday and was on track for a twelfth straight annual gain, although wary investors stayed on the sidelines as last-ditch attempts to resolve a U.S. fiscal crisis seemed to be getting nowhere.

Lawmakers pushed the United States to the edge of the "fiscal cliff" as they struggled to reach a last-minute deal that could prevent the world's largest economy from plunging into recession. After adjourning for the day, the Senate will reconvene at 1600 GMT on Monday.

"Maybe a bit of cooling off is good. Well, they have a few hours to sort themselves," said CIMB regional economist Song Seng Wun. "I think Asian equities are probably, at this moment, positioning themselves for a possibility that there may not a be last minute compromise of sorts."

Gold added $8.79 an ounce to $1,663.69 by 0656 GMT. It is up around 6 percent for the year, heading for a 12th straight year of gains on rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks.

A failure to clinch a deal may spur safe-haven buying of gold, but since many investors have both equities and gold in their portfolios, the metal may also track stock markets higher if the White House and Congress reach an agreement.

U.S. gold for February rose $8.60 an ounce to $1,664.50.

Market holidays were in force in Japan, South Korea, Taiwan, Indonesia, Thailand, the Philippines and Vietnam, with half-day trading in Australia, New Zealand, Hong Kong and Singapore.

Several major Asian stock indexes closed on Monday with the strongest annual gains in years, but investors feared the equity market could change course because of the lack progress in talks to avert the looming U.S. "fiscal cliff".

"I have nothing to share today. I guess the market in the Middle East will still be trading a little bit. But that's about it," said a physical gold dealer in Singapore.

"Premiums are unchanged at $1 to $1.20."

The euro slipped 0.16 percent to $1.319, hovering below an 8-month high of $1.33085 hit on Dec. 19.

An agreement on the U.S. budget would be viewed as a positive for riskier currencies such as the euro and Australian dollar, while a deadlock would

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