Gold on Tuesday climbed from a one—week low, gaining with other commodities including oil, on optimism US lawmakers will reach agreement on the budget to avert automatic spending cuts.

The gold rose 0.2 per cent to $1,701.85 an ounce.

It dropped to $1,686.70 yesterday, the lowest price since December 7. Silver also climbed 0.6 per cent to $32.47 an ounce and is 17 per cent higher this year.

President Barack Obama and House Speaker John Boehner are negotiating to avert the so—called fiscal cliff, more than $600 billion in tax increases and spending cuts set to start in January. Obama yesterday made a new offer that would raise taxes by $1.2 trillion and cut $1.22 trillion in spending.

The US Dollar Index, a gauge against six counterparts, held near a two—month low and crude rose for a third day.

Gold rallied 8.8 per cent this year, set for a 12th annual gain, as central banks from the US to China and Europe took action to prop up economies, debasing currencies and increasing demand for bullion as a protection of wealth.

(This article was published on December 18, 2012)
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