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Gold Ends Marginally Higher; Fiscal Cliff Weighs

Gold futures settled higher after fluctuating for most of the session Friday, due mostly to uncertainty over the looming U.S. fiscal cliff and on concerns over demand for the precious metal. Investors continued to monitor the progress made in resolving the U.S. fiscal cliff with the government holding talks with Republicans over the issue. Nevertheless, gold prices for the week shed 0.9 percent.

Gold for December delivery, the most actively traded contract, gained $0.90 or 0.05 percent to $1,714.70 an ounce Friday on the Comex division of the New York Mercantile Exchange.

Gold for December delivery traded at an intraday high of $1,717.20 and a low of $1,705.60 an ounce.

Yesterday, gold settled at a two-week low on a World Gold Council report that projected weak demand for the precious metal in the third quarter. Global demand for the precious metal slipped due mainly to a significant drop in Chinese consumption during the September quarter. Meanwhile, investors largely ignored a slew of other macroeconomic data out of the U.S. and Europe.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.28 on Friday, up from 81.03 in North American trade late Thursday. The dollar scaled a high of 81.46 intraday and a low of 81.00.

The euro traded lower against the dollar at $1.2725 on Friday, as compared to $1.2782 late Thursday in North America. The euro scaled a high of $1.2784 intraday and a low of $1.2692.

In economic news, the Federal Reserve Bank of Philadelphia report showed an unexpected contraction in regional manufacturing activity in the month of November, due mostly to the disruptive effects of Superstorm Sandy. The Philly Fed said its diffusion index of current activity plunged to a negative 10.7 in November from a positive 5.7 in October, with a negative reading indicating a contraction in regional manufacturing activity. Economists expected the index to edge down to a positive 4.5. The Philly Fed index was at its lowest since coming in at a negative 12.9 in July.

Conditions for New York manufacturers declined at a modest pace in November, the Federal Reserve Bank of New York said in a report on Thursday, with the general business conditions index remaining negative for the fourth consecutive month. The general business conditions index rose to a negative 5.2 in November from a negative 6.2 in October, although a negative reading indicates a continued contraction in regional manufacturing activity. Economists expected the index to climb to a negative 5.0.

The U.S. manufacturing sector also felt the impact of Superstorm Sandy, with industrial production dropping 0.4 percent in October, the Federal Reserve said. October was shaping up to be a strong month in terms of factory output until key manufacturing regions were ground to a halt by Sandy. The Fed estimates the storm lowered total output by 1 percentage point. September production was revised down to a 0.2 percent gain from the initial estimate of a 0.4 percent increase.

Elsewhere, eurozone trade surplus increased to 9.8 billion euros in September, Eurostat reported. The surplus totaled 5.2 billion euros in August and 1.7 billion euros in September 2011. On a seasonally adjusted basis, exports dropped 1.1 percent in September month-on-month, partially offsetting a 3.3 percent rise in August. Likewise, imports slipped 2.7 percent after increasing 2.3 percent.

Meanwhile, the euro area current account surplus declined to 0.8 billion euros in September from 10.9 billion euros in August, the European Central Bank said.

by RTTNews Staff Writer

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