Gold Prices Ease As Fiscal Talks Continue

Gold futures traded weaker on Wednesday as investors shied away from the market amid uncertainty over fiscal-cliff talks, though some commercial buyers in Southeast Asia were reportedly active at the lower prices.

Gold for February delivery  fell $2.40 to $1,657.10 an ounce in electronic trade on the Comex division of the New York Mercantile Exchange.

At the start of the week, gold settled 60 cents lower at $1,659.50 an ounce, in Monday’s shortened trading session in New York ahead of the Christmas holiday.

Physical-gold trading in the U.S. is set to reopen later in the day, while Wall Street stocks will also trade after the Christmas Day holiday. Trading in London remained closed Wednesday for the Christmas break.

President Barack Obama plans to return early from his annual vacation to Hawaii in order to take part in talks to avert the fiscal cliff of austerity measures due to take effect at the start of the year, reports said late Tuesday.

Obama, who departed with his family for his home state on Friday, is now due to leave Wednesday night and reach Washington early Thursday, reports said.

The U.S. Congress was also due to return to the capital Thursday for more talks on issues related to tax hikes and spending cuts which are due kick in less than a week, bringing about what some economists see as an austerity package that could drag the economy into recession in 2013.

Meanwhile, regional jewellers and other investors in Asia were taking advantage of the lower prices to build up physical holdings, although overall trade was relatively subdued owing to the holiday season, according to reports which cited traders in Singapore.

Mild losses for gold came as the dollar edged higher against the yen on signs the Bank of Japan may be seeking to drive the Japanese currency lower. The ICE dollar index , which tracks the U.S. unit against a basket of six other major currencies, slipped to 79.683 from 79.680 a day earlier.

Within other metals markets, March silver futures  rose 8 cents, or 0.3%, to $29.97 an ounce.

Copper for March delivery  rose 3 cents, or 0.9%, to $3.57 a pound and January platinum  rose $13.10, or nearly 1%, to $1,548 an ounce. March palladium  rose $2.90, or 0.4%, to $687.45 an ounce.

Marketwatch