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Gold rises on fiscal cliff fears, Indian holiday demand

10 November 2012 03:26 (UTC +04:00)

Baku-APA. Gold futures on the COMEX division of the New York Mercantile Exchange rose Friday, as investors concern regarding the looming U.S. "fiscal cliff" yielded some safe-haven buying, and an upcoming Indian holiday also lifted demand, APA reports quoting Xinhua.

The most active gold contract for December delivery gained 4.9 dollars, or 0.28 percent, to settle at 1,730.9 dollars per ounce.

Gold settled at its highest level since Oct. 18 on Friday, and closed up 3.3 percent for the week.

Investors continue to worry about the upcoming U.S. "fiscal cliff," or automatic spending cuts and tax hikes set to trigger at the end of the year if Congress cannot agree on a new deficit reduction plan.

According to the U.S. Congressional Budget Office, the U.S. economy will likely enter another recession if lawmakers cannot reach an alternate deal, and fears of the fiscal cliff have led to huge sell-offs this week in the U.S. stock market.

However, gold’s safe haven appeal in times of economic uncertainty has pushed the precious metal higher in trading this week, leading gold to post a weekly gain for the first time in five weeks.

Also supporting gold Friday were expectations of increased demand in India due to the upcoming Dhanteras, the festival of wealth, which falls on Sunday. India is one of the world’s largest buyers of gold.

Outside market forces were mixed, as the session saw gains in crude oil and U.S. equities, but also a sharply higher dollar. A stronger greenback pressures commodities, as it makes them more expensive for holders of other currencies.

Silver for December delivery rose 35.9 cents, or 1.11 percent, to close at 32.599 dollars per ounce.