Gold Steadies near Three-week High on Softer Equities, China Demand

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January 7, 2014 2:52 PM EST

Gold held its ground near a three-week high on Tuesday as weaker equities and robust physical demand in China supported prices, while U.S. gold futures also steadied after unusually sharp movements the session before.

FUNDAMENTALS

* Spot gold was little changed at $1,237.19 an ounce by 0010 GMT.

* Unusually heavy trading volumes rattled U.S. gold futures on Monday, triggering a brief halt while temporarily sending bullion prices down over $30 an ounce, or about 3 percent. Prices eventually closed flat.

* Hedge funds and money managers broadly raised their net long positions in gold and silver futures and options in the week to December 31, data from the Commodity Futures Trading Commission showed on Monday.

* Indian officials are in talks to cut a record high import duty on gold and relax rules on exports, government sources said, after the measures helped narrow the country's trade deficit and now threaten to encourage smuggling.

* Janet Yellen, a key force behind the Federal Reserve's unprecedented and controversial efforts to boost the U.S. economy, was confirmed by the Senate to lead the central bank just as it begins to unwind that stimulus.

* Physical demand for bullion in China, the world's biggest gold consumer, remained strong with premiums on the Shanghai Gold Exchange climbing to about $20 an ounce on Monday from Friday's $17.

MARKET NEWS

* Asian shares stabilised on Tuesday after four straight days of losses, while the dollar was on the defensive after disappointing U.S. services sector data raised concerns about stuttering growth in the world's largest economy.

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