PRECIOUS-Gold falls to one-month low on fund sales, technicals
* Fund liquidation, technical selling weigh on gold
* Goldman Sachs predicts turn in gold's bull cycle
* South Korea bought 14 T gold in November
(Updates throughout, changes byline, dateline, previously LONDON) NEW YORK, Dec 5 (Reuters) - Gold slipped to a one-month low below $1,700 an ounce on Wednesday as a weaker price forecast by Goldman Sachs triggered some fund liquidation, offsetting news of fresh central bank buying. Bullion dropped around 0.2 percent on technical weakness below its 100-day moving average. Losses accelerated after it later broke through support at Tuesday's low at $1,690.64. Gold was pressured after Goldman Sachs cut its 2013 gold outlook and said the metal's current bull cycle will likely turn next year as rising real interest rates and better growth offset monetary stimulus from the Federal Reserve. "There is some heavy selling by fund investors and leveraged money, but physical gold demand should benefit in the long run from the fiscal cliff after these short-term fluctuations," said Miguel Perez-Santalla, a vice president of physical gold dealer BullionVault. Spot gold was down 0.5 percent at $1,688.90 an ounce $1,684.40, the weakest since Nov. 6. U.S. COMEX gold futures for December delivery were down $4 an ounce at $1,691.80, with trading volume set to finish below its 30-day average, preliminary Reuters data showed. Republicans and Democrats dug in on budget talks to avoid the $600 billion in tax hikes and spending cuts due to kick in the New Year on Wednesday, with both sides urging quick action but offering no compromises in a political stare-down that shows no signs of breaking.
PHYSICAL BUYING STRONG Despite gold's recent pullback, physical demand should underpin the market at lower prices, traders said. Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, hit a record high as the fund reported a 2.4 tonne inflow on Tuesday. Similarly, physical coin and bullion sales also received a boost from uncertainty surrounding the fiscal cliff. U.S. Mint's November gold coin sales had their highest November performance in 14 years, while gold dealer BullionVault also said it notched net buying of nearly 18,000 ounces for a second straight monthly rise in November. The metal rose in early session after South Korea's central bank said it bought 14 tonnes of the metal in November, its fourth purchase in about 1-1/2 years. Central banks have switched to being net buyers of gold from net sellers in the last two years, with most acquisitions made accounted for 455 tonnes of demand last year. Among other precious metals, silver was down 0.7 percent at $32.69 an ounce, platinum inched down 36 cents to $1,578.74, and palladium edged up 0.5 percent at $680.90. Prices at 11:55 a.m. EST (1655 GMT)
LAST NET PCT YTD CHG CHG CHG US gold 1691.80 -4.00 -0.2% 8.0% US silver 32.785 -0.023 -0.1% 17.4% US platinum 1583.00 0.10 0.0% 13.1% US palladium 685.30 2.95 0.4% 4.4%Gold 1690.16 -6.58 -0.4% 8.1% Silver 32.69 -0.22 -0.7% 18.1% Platinum 1578.74 -0.36 0.0% 13.3% Palladium 680.90 3.20 0.5% 4.4%Gold Fix 1694.00 -9.00 -0.5% 7.6% Silver Fix 33.07 -23.00 -0.7% 17.4% Platinum Fix 1587.00 5.00 0.3% 14.9% Palladium Fix 681.00 3.00 0.4% 7.1%
(Additional reporting by Jan Harvey and David Brough in London; Editing by Bob Burgdorfer)