Gold futures arrested their recent slide Friday, ticking higher on modest safe-haven demand after House Republicans canceled a vote to raise taxes on top U.S. earners and stoked worries that talks to avert the so-called fiscal cliff will fail.
Gold for February delivery rose $3.70 an ounce, or 0.2%, to trade at $1,649.50 U.S. in electronic trade.
Gold’s gains came as global equity markets and U.S. stock index futures slumped in the wake of a decision by House Republican leaders backed away from a proposal that included a tax hike on households earning more than $1 million U.S. a year
The plan ran into a backlash from conservative Republicans, leaving Speaker John Boehner no choice but to cancel the vote and adjourn the House, plunging Washington into disarray.
The move heightens fears that the White House and lawmakers will be unable to reach a budget deal before Jan. 1, when around $600 billion U.S. in spending cuts and tax hikes will otherwise begin to take effect
Economists fear the full impact of the event, dubbed the fiscal cliff, could send the U.S. economy back into recession.
Gold prices fell sharply Wednesday and Thursday and remain on pace for a 2.8% weekly decline. Gold futures are off more than 3.6% since the beginning of December.
Ahead of the latest turn in the fiscal-cliff saga, reduced economic and sovereign tail risks were seen "dampening investment demand for gold," wrote strategists at Credit Suisse.
Analysts noted gold bears were encouraged Thursday when futures fell through the 200-day moving average at around $1,661 U.S. an ounce.
Meanwhile, March silver rose 29 cents, or 0.1%, to trade at $29.97 U.S. an ounce. Silver on Thursday settled below $30 U.S. an ounce for the first time since late August, sealing an 8% decline for the metal over five trading sessions.
In other metals action Friday, copper for March delivery was little changed at $3.54 U.S. a pound. January platinum rose $2.90, or 0.2%, to $1,549.10 U.S. an ounce, but March palladium fell $7.30, or 1.1%, to $672.95 U.S. an ounce.
