Gold dropped for the first time in four days as optimism that the U.S. economy is recovering and lawmakers will reach a budget deal damped demand for the metal as a protection of wealth. Platinum and palladium advanced.
Spot gold fell as much as 0.4 percent to $1,651.62 an ounce and was at $1,655.73 at 3:25 p.m. in Singapore. It lost 2.3 percent last week, the most since the period to June 22, after data showed that consumer spending, durable-goods orders and industrial output increased in November. A separate report showed the largest economy grew at a 3.1 percent annual rate last quarter, exceeding all projections in a Bloomberg survey.
The U.S. may be a “bright spot” for the global economy in 2013, according to Huang Guobo, who oversees management of the $3.3 trillion foreign-exchange reserves in China, the largest foreign lender to the U.S. government. President Barack Obama and House Speaker John Boehner have not yet been able to reach a deal to avert more than $600 billion in automatic spending cuts and tax increases from Jan. 1, known as the fiscal cliff.
“The U.S. economy has been recovering and the market is optimistic on resolution of the fiscal cliff,” Janet Kong, an analyst at China International Capital Corp., the nation’s largest investment bank, wrote in a note.
Gold for February delivery slipped 0.1 percent to $1,658.30 an ounce on the Comex in New York. Holdings in gold-backed ETPs reached a record 2,632.516 metric tons on Dec. 20, and have expanded 12 percent this year, data compiled by Bloomberg show.
Spot gold is 5.9 percent higher this year, set for a 12th annual gain, as investors sought the metal to hedge against weakening currencies and the threat of inflation after central banks around the world boosted stimulus to prop up economies.
Spot platinum rose as much as 0.9 percent to $1,549 an ounce, before trading at $1,548.50. The best performing precious metal in 2012 has risen 11 percent. Palladium rose 0.2 percent to $687.25 an ounce, 4.9 percent higher this year. Cash silver fell 0.1 percent to $29.925 an ounce, up 7.5 percent this year.
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