Gold Gains On Fiscal-Cliff Hopes, Weaker Dollar

Gold futures extended week-to-date gains Tuesday, returning above $1,700 an ounce, amid renewed optimism for progress on U.S. budget talks and a slightly weaker dollar.

Gold for February delivery  rose $5.50 to $1,703.70 an ounce. The precious metal had gained $1.20, or 0.1%, to $1,698.20 an ounce in New York on Monday.

Tuesday’s gains came after reports that U.S. President Barack Obama made a new offer to avert the U.S. fiscal cliff of looming tax hikes and severe spending cuts, moving closer to the Republicans’ position.

The White House’s latest counterproposal includes $1.2 trillion in revenue increases and $1.22 trillion in spending reductions, Reuters reported.

Meanwhile, the dollar index , which measures the greenback against a basket of six rivals, slipped to 79.533, down from 79.557 in late North American trading on Monday.

A higher dollar makes commodities priced in dollars, including gold, less attractive to holders of other currencies.

While negotiations over the U.S. fiscal cliff continue, “the outlook [for gold] remains uncertain,” said commodity strategists at Deutsche Bank.

“Once clear, we would expect that gold could move higher, likely towards the upper band of its recent range, $1,750 an ounce,” the strategists said.

Around the wider metals complex, silver for March delivery  rose 22 cents to $32.50 an ounce.

March palladium  climbed $5.10 to $703.40 an ounce, while January platinum  rose $7.80 to $1,616.30 an ounce.

Copper for March delivery  climbed 2 cents to $3.69 a pound.

Marketwatch