Picture: REUTERS
Picture: REUTERS

SINGAPORE — Gold ticked up to about $1,660 an ounce on Monday after the euro firmed against the dollar, but wary investors stayed on the sidelines as last-ditch attempts by US legislators to resolve a fiscal crisis seemed to be getting nowhere.

Legislators pushed the US to the edge of the fiscal cliff as they struggled to reach a last-minute deal that could prevent the world’s largest economy from plunging into recession. After adjourning for the day, the Senate will reconvene at 4pm GMT on Monday.

"Maybe a bit of cooling off is good. Well, they have a few hours to sort themselves," CIMB regional economist Song Seng Wun said. "I think Asian equities are probably, at this moment, positioning themselves for a possibility that there may not a be last-minute compromise of sorts."

Gold added $5.12 an ounce to $1,660.02 by 3.10am GMT.

It is up about 6% for the year, heading for a 12th straight year of gains on rock-bottom interest rates, concern about the financial stability of the eurozone and diversification into bullion by central banks.

A failure to clinch a deal would likely spur safe-haven buying of gold, but since many investors have both equities and gold in their portfolios, the metal may also track stock markets higher if the White House and Congress finally reach an agreement.

US gold for February rose $5.20 an ounce to $1,661.10.

Market holidays were in force in Japan, South Korea, Taiwan, Indonesia, Thailand, the Philippines and Vietnam, with half-day trading in Australia, New Zealand, Hong Kong and Singapore.

MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed. It has gained about 18% this year, a sharp turnaround from an 18% plunge in 2011.

"I have nothing to share today. I guess the market in the Middle East will still be trading a little bit. But that’s a about it," a physical gold dealer in Singapore said. "Premiums are unchanged at $1 to $1.20."

Spot gold drew support from the euro, which edged up 0.1% to $1.3231 but hovered below an eight-month high of $1.33085 hit on December 19.

An agreement on the US budget would be viewed as a positive for riskier currencies such as the euro and Australian dollar, while a deadlock would be deemed positive for the safe-haven and highly liquid dollar.

A softer dollar boosts commodities priced in the greenback by making them cheaper for holders of other currencies.

"There’s nothing at all in Asia. It’s very quiet. We don’t expect surprises until the talks resume," said a dealer in Singapore.

Buoyed by his re-election in November, President Barack Obama has insisted any deal must include a tax increase on the wealthiest Americans, who have seen their earnings rise steadily over the past decade at a time when income for the less affluent has stalled.

Reuters