Orlando, Florida 12/12/2013 - Gold futures slid in the US on Thursday as a possible US budget deal not only reduced safe-haven demand but also takes the Federal Reserve one step closer to tapering its quantitative easing programme. Gold prices for February delivery on the Comex division of the New York Mercantile Exchange were last down $20.70 or 1.7 percent at $1,236.50 per ounce. Trade has ranged from $1,232.70 to $1,256.50. US budget negotiators have reached a provisional two-year deal to avoid another government shutdown was positive for the economy but was also seen as providing more scope for the Fed to rein in its stimulus scheme of $85 billion in monthly bond purchases. Meanwhile, in wider markets, the euro was slightly weaker at 1.3777 against the dollar, while Germany's DAX and France's CAC-40 were down 0.8 percent and 0.6 percent respectively. In Asia, the Nikkei and Hang Seng closed down 1.12 percent and 0.51 percent. "With the sharp slide in equities over the last 24 hours, that in turn punished gold shares and that negative news was accentuated by weak closes in Asia overnight and also by a rise in negative fundamental and technical views from the gold trade," the Hightower Report said. A sharp drop in Indian gold imports last month has also soured the tone of the market, it added. If the equity sell-off gathers pace, there may well be some contagion into the metals, especially gold prices. The liquidity in the gold market means it is an easy place to raise money if margin calls need paying, FastMarkets analyst William Adams said. "But while the selling in equities is likely to be for profit reasons, some of that profit may well end up being parked in 'oversold' gold for a while. So while there may be an initial downward reaction on equity weakness, the secondary reaction might well be positive for bullion," he added. As for the other precious metals, Comex silver prices for March delivery were last down 56.1 cents at $19.795 an ounce. Trade has ranged from $19.70 to $20.345. "Unlike the gold market, silver prices were able to extend its current recovery rally to a new high for the move, as well as hold its ground in positive territory midway through most of Wednesday's trading session," the Hightower Report said. "[But] the overnight action has dashed that potentially beneficial technical action and that could mean that silver prices now have more ground to lose today than does the gold market," it added. Platinum prices for January delivery on the Nymex were last down $12.50 at $1,372.70 per ounce while the most actively traded palladium contract was at $730.90, down $7.65. - See more at: http://www.fastmarkets.com/gold-news/68231-0-en#sthash.srQ4KK0W.dpuf

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