GLOBAL MARKETS-Gold tumbles, shares up on some progress in US budget talks
* Gold breaks below 200-day moving average for the first time in 4 months
* Wall St advances on 'fiscal cliff' talks
* IntercontinentalExchange buys NYSE Euronext for $8 billion
NEW YORK, Dec 20 (Reuters) - Gold prices tumbled to their lowest since August on a burst of year-end selling on Thursday, while global shares edged slightly higher on signs of modest progress in negotiations about the U.S. "fiscal cliff". Wall Street advanced in late afternoon trade after Republican House Speaker John Boehner pledged to keep working on a solution to the "fiscal cliff" while still criticizing President Barack Obama's approach to budget talks.
Investors have hoped policymakers would reach an agreement soon, but progress has been slow. Boehner said he expected to continue to work with Obama to find a solution, but repeated his charge that Obama and the Democrats were trying to "slow walk" the country over the fiscal cliff. Gold prices plunged below $1,650 an ounce, falling more than 1 percent as heavy liquidation by hedge funds and signs of an improving U.S. economy triggered a technical sell-off that sent prices to their lowest in four months. The metal broke below its 200-day moving average as safe-haven bidding faded after a government report showed the U.S. economy grew at a faster-than-expected 3.1 percent annual rate in the third quarter. Silver also dived 4 percent and platinum group metals fell around 2 percent. "There is a concern among the hedge funds that they will have more redemptions because of the fact that they underperformed the markets this year as a whole," said Jeffrey Sica, chief investment officer of SICA Wealth Management which has over $1 billion in assets. Spot gold was down 1.3 percent at $1,645.10 an ounce, having hit a low of $1,635.09, the weakest since Aug. 22. Silver, which tends to have higher volatility than gold, was down 4.1 percent to $29.71, having hit a four-month low of $29.60 an ounce.
FISCAL CLIFF TALKS Stocks rallied earlier in the week on signs of progress in the fiscal cliff negotiations, but with the S&P 500 up 14.6 percent so far this year, investors are taking the opportunity to engage in some hedging as 2012 comes to a close.
Republicans in the U.S House of Representatives pushed ahead with their own fiscal plan, complicating negotiations with the White House over a way to avoid a series of steep tax hikes and spending cuts due in early 2013. Obama has vowed to veto the plan. "Speaker Boehner went on the air (on Thursday) and basically told us he doesn't like what the president's doing or not doing, and the markets rallied on that, which was kind of weird. But we have very light volume," said Stephen Guilfoyle, a trader at Meridian Equity Partners in New York. About 4 billion shares had changed hands on major U.S. exchanges, a typically light day of trading for late December. NYSE Euronext was the day's biggest gainer, surging 33.5 percent to $32.12 as the S&P 500's top percentage gainer, after IntercontinentalExchange Inc said it would buy the operator of the New York Stock Exchange for $8.2 billion. ICE shares were last down 0.7 percent at $127.40. MSCI's world equity index has risen steadily over the past five weeks on optimism that a budget deal would clear the way for stronger growth in 2013. It was up 0.1 percent, slightly above 342 points on Thursday, not far from levels last seen in July 2011. The Dow Jones industrial average was up 17.63 points, or 0.13 percent, at 13,269.60. The Standard & Poor's 500 Index was up 4.35 points, or 0.30 percent, at 1,440.16. The Nasdaq Composite Index was up 2.44 points, or 0.08 percent, at 3,046.80. In Europe, shares stuttered as indexes approached levels considered overbought. The FTSEurofirst 300 closed virtually unchanged at 1,142.80 points. The 14-day relative strength index, a widely used technical momentum indicator, stood at 67.5, close to the 70 and above level that is considered "overbought." In other markets, currencies held to tight ranges in thin pre-holiday trade, with the euro see-sawing against the U.S. dollar while investors struggle to gauge developments on U.S. budget talks against a backdrop of generally positive U.S. economic data. In afternoon New York trade, the euro recouped midday losses to gain 0.08 percent, trading at $1.3236. On Wednesday, the euro hit an 8-1/2-month high of $1.3308. Still, market players were mostly positioned for a U.S. deal to be reached on time, with some expecting the euro to go as high as $1.3500 by early January. The euro had been as high as $1.3295 earlier on Thursday. Investors responded to better-than-expected U.S. third-quarter GDP data and it held gains after the release of more robust economic numbers. Investors had bought more euros - a currency that tends to benefit in times of increased risk appetite - as recovery in the world's largest economy seemed to be on track. The euro edged up 0.07 percent to 111.70 yen. The dollar slipped 0.02 percent to 83.38 yen. The Japanese currency had earlier slipped against the dollar after the scale of asset purchases set by the Bank of Japan disappointed some investors who had positioned for more aggressive easing. The Japanese central bank increased its asset buying by 10 trillion yen and said it would debate next month whether there is room to raise its inflation target, a move that could weaken the currency. U.S. Treasuries prices turned flat, paring earlier gains mid-afternoon Thursday, as Wall Street stocks climbed to session highs on revived optimism about a coming budget deal that will avert a U.S. fiscal crisis, which curbed some bids for bonds. Benchmark 10-year Treasury notes were up 1/32 in price with a yield of 1.803 percent. Earlier, they were up 11/32 with a yield 1.767 percent, down 4 basis points from late on Wednesday.