"People are more cautious because there is no clear sign when the fiscal cliff will be solved," said Brian Lan, Managing Director of GoldSilver Central Pte in Singapore, adding that gold was likely to trade in the range of $1,700 and $1,750 before the market saw any clarity in the budget talks.
But gold could also gain from this uncertainty in the long term as Washington is likely reach a compromise, rather than a perfect solution, with the deadline drawing near - leading to expectations of more help on the monetary side from the central bank, analysts said. Monetary easing has been a main driver of gold prices in recent years. Spot gold inched up 0.2 percent to $1,718.90 an ounce by 0725 GMT, after dropping a slight 0.3 percent in November. US gold gained 0.4 percent to $1,718.90.
Echoing Lan's price outlook, Reuters market analyst Wang Tao expected spot gold to consolidate in the range of $1,705.64 to$1,730 an ounce for one or two trading sessions before seeking a direction. In the physical bullion market, dealers reported light buying interest in Asia. Gold bar premium in Hong Kong was quoted in the range of 60 cents to $1.10 an ounce above London prices, versus 50 cents to $1 last week.