Gold dropped as the stalemate in U.S. budget talks weighed on commodities, countering record assets in exchange-traded products. Silver, platinum and palladium fell.
Spot gold slid 0.2 percent to $1,712.95 an ounce at 10:13 a.m. in Singapore. Bullion for February delivery dropped 0.4 percent to $1,714.30 an ounce on the Comex in New York, while oil and copper retreated. Holdings in ETPs, up 11 percent this year, expanded to 2,623.446 metric tons yesterday, data compiled by Bloomberg show.
U.S. lawmakers are trying to avert more than $600 billion in tax increases and spending cuts starting in January. House Republicans, rejecting President Barack Obama’s demand for higher tax rates, yesterday countered with a $2.2 trillion deficit-cutting plan, which White House Communications Director Dan Pfeiffer said then “does not meet the test of balance.”
“Gold will be driven by sentiment in the broader financial markets in the near term as investors weigh the U.S. fiscal cliff negotiations,” said Xiang Nan, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage.
Gold may advance as businesses temper spending and central- bank stimulus measures fall short, John Gilbert, chief investment officer at General Re-New England Asset Management, a unit of Warren Buffett’s Berkshire Hathaway Inc., wrote in a newsletter. Buffett said in a February letter to Berkshire shareholders that investors should avoid gold, because its uses are limited and it doesn’t have the potential of farmland or companies to produce new wealth.
Cash silver fell 0.7 percent to $33.42 an ounce, spot platinum lost 0.4 percent to $1,599.50 an ounce, and palladium slipped 0.7 percent to $686 an ounce.
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