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Gold Edges Down
Gold edged lower on Monday, extending losses to a third straight session, as trade slowed ahead of the year-end holidays and investors showed little response to the latest progress in U.S. budget talks.
U.S. House of Representatives Speaker John Boehner’s offer to accept a tax rate increase for the wealthiest Americans removes a key Republican road block to a deal resolving the year-end “fiscal cliff”.
But there is no imminent sight of an agreement, as President Barack Obama will face stiff Democratic opposition to cuts in entitlement spending.
Gold barely responded to the news, and moved in a narrow range below $1,700 an ounce, after falling for the third straight week, despite a fresh bond buying scheme announced by the Federal Reserve last week.
“Participation is really low right now,” said a Hong Kong-based trader. “It hasn’t been a very exciting year for most people and I don’t think they want to stick around for the last week and a half. People want to put away everything before starting on a totally clean slate in 2013.”
In the currency market, the yen slumped to its lowest against the dollar in more than a year and a half after Japan’s conservative Liberal Democratic Party won the Sunday election, with investors expecting aggressive monetary easing from the new government.
“The medium-term trend is a weaker yen versus the dollar, which gives investors in gold and platinum some comfort as a weaker yen means higher prices,” said Yuichi Ikemizu, head of commodity trading for Japan at Standard Bank.
Hedge funds and money managers raised their bullish bets on U.S. gold futures and options to 129,865 contracts in the week ended Dec. 11, up from a more than three-month low of 126,073 lots in the previous week.
But they cut net length in silver to 34,862 lots, the lowest since late November.