Gold climbed from a one-week low, gaining with other commodities including oil, on optimism U.S. lawmakers will reach agreement on the budget to avert automatic spending cuts. Silver rose from the lowest in more than a month. Spot gold rose as much as 0.3 percent to $1,702.40 an ounce, and traded at $1,702.05 an ounce at 12:49 p.m. in Singapore, advancing for a second day. It dropped to $1,686.70 yesterday, the lowest price since Dec. 7. Gold for February delivery gained 0.3 percent to $1,703.10 an ounce on the Comex in New York. President Barack Obama and House Speaker John Boehner are negotiating to avert more than $600 billion in tax increases and spending cuts set to start in January, known as the fiscal cliff. Obama yesterday made a new offer that would raise taxes by $1.2 trillion and cut $1.22 trillion in federal spending, according to a person familiar with the talks. The Dollar Index, a gauge against six counterparts, held near two-month low. “Gold and the rest of the financial markets continue to be held hostage by the fiscal-cliff negotiations,� Sun Yonggang, macroeconomic strategist at Everbright Futures Co., a unit of one of China’s largest state-owned investment companies. “While we maintain that gold’s longer-term uptrend hasn’t changed, as we approach the end of the year, it’s unlikely prices will make big moves in either direction.� Haven Demand Gold rallied 8.9 percent this year, set for a 12th annual gain, as central banks from the U.S. to China and Europe took action to prop up economies, debasing currencies and increasing haven demand. The U.S. Federal Reserve last week expanded its asset-purchase program, pledging to buy $45 billion a month of Treasury securities starting in January. In Japan, Shinzo Abe’s victory in the election on Dec. 16 boosted speculation the Bank of Japan will add to stimulus. The Reserve Bank of Australia decided to cut interest rates to match the half-century low set during the 2009 global recession as a softer job market gave it room to bolster demand, minutes of its Dec. 4 meeting showed. Cash silver climbed 0.5 percent to $32.4488 an ounce and is 17 percent higher this year. The best performing precious metal this year fell to $32.0612 yesterday, the cheapest since Nov. 8. Spot platinum rose 0.5 percent to $1,615 an ounce, increasing 15 percent this year. Palladium gained 0.5 percent to $703.25 an ounce, adding 7.3 percent this year. To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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