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Gold Ends Lower On Fiscal Cliff; Drops 0.3% For Week

Gold futures ended lower Friday, as investors continue to focus on the outcome of the renewed U.S. budget talks, with the White House and the Congress involved in a last-ditch effort to avert the fiscal cliff due in few days. A failure to agree to a deal could send the world's largest economy back into recession. The precious metal found little other support and was also impacted by some upbeat economic data out of the U.S. For the week, gold prices shed 0.3 percent.

Gold for February delivery, the most actively traded contract, dropped $7.80 or 0.5 percent to close at $1,655.90 an ounce Friday on the Comex division of the New York Mercantile Exchange.

Gold for February delivery scaled an intraday high of $1,667.00 and a low of $1,654.20 an ounce.

Yesterday, gold settled marginally higher mostly on its safe haven appeal as investors continued to monitor the progress made in reviving talks to end the U.S. budget stalemate. Nevertheless, the uptick in prices of the precious metal was somewhat checked with some upbeat macroeconomic data on new home sales and initial job claims in the U.S.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.66 on Friday, down from 79.69 in North American trade late Thursday. The dollar scaled a high of 79.93 intraday and a low of 79.59.

The euro traded lower against the dollar at $1.3221 on Friday, as compared to $1.3237 late Thursday in North America. The euro scaled a high of $1.3256 intraday and a low of $1.3168.

In economic news from the U.S., the National Association of Realtors said its pending home sales index rose 1.7 percent to 106.4 in November from a downwardly revised 104.6 in October. Economists had been expecting the index to increase by about 1.8 percent. With the increase, the pending home sales index rose to its highest level since coming in at 111.3 in April of 2010, when sales were boosted by a home buyer tax credit.

A report from the Institute for Supply Management showed Chicago-area business activity expanded for the second consecutive month in December, with the business barometer climbing to 51.6 from 50.4 in November. A reading above 50 indicates an increase in business activity. Economists expected the index to rise to 51.0. A notable turnaround by new orders contributed to the increase by the business barometer, with the new orders index jumping to 54.0 in December from 45.3 in November.

From the euro zone, French consumer spending recorded surprise improvement in November, data from the statistical office Insee showed. The overall consumer spending was up 0.2 percent month-on-month in November, after a revised 0.1 percent fall in the previous month. Economists expected spending to remain unchanged.

A separate report from the Insee showed that the French economy expanded only 0.1 percent in the third quarter from the prior quarter. The third quarter growth was downgraded from 0.2 percent and follows a 0.1 percent fall in the second quarter.

Among a slew of economic reports released from Japan, the consumer price inflation report showed that Japanese core consumer prices fell 0.1 percent year-over-year in November. Core consumer prices for Tokyo considered a leading indicator for Japan declined a steeper 0.5 percent.

by RTT Staff Writer

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