PRECIOUS-Gold up after U.S. budget deal but seen vulnerable
* Equities rally boosts gold to two-week high
* India central bank looks at further curbs on gold imports
NEW YORK, Jan 2 (Reuters) - Gold rose nearly 1 percent on W ednesday, as economic optimism fuelled sharp gains on Wall Street after U.S. lawmakers clinched a last-minute deal to avoid tax hikes that threatened to send the economy back to a recession. Silver and platinum group metals also rose sharply after the Congress passed a bill to avert immediate austerity measures, as it raised taxes on wealthy individuals and families and preserved certain benefits. GOL Bullion, however, appears to lack momentum to extend its rally on the first trading day of 2013, analysts said. Signs of stalling growth in Europe and a plan by India to curb gold import could prompt gold investors to sell. "I think the reaction is way overdone, and I wouldn't be surprised to see a fairly substantial sell-off that could erase a lot if not all of these gains," said Frank McGhee, head precious metals trader at Integrated Brokerage Services. Spot gold was up 0.8 percent at $1,687.84 an ounce by 12:38 p.m. EST (1738 GMT), off an two-week high of $1,694.70 reached earlier in the session. U.S. COMEX gold futures for February delivery rose $13.00 an ounce to $1,688.80 an ounce, with trading volume on track to finish below its 30-day average, preliminary Reuters data showed. Gold ended up around 7 percent in 2012 for its 12th straight year of gains, although it recorded a soft final quarter when it fell 5.4 percent, its worst quarterly performance since the third quarter of 2008. Uncertainty remained after the U.S. deal. Spending cuts of $109 billion in military and domestic programs were only delayed for two months, and another fight over the U.S. debt limit looms at that time as well. Gold is traditionally an inflation hedge and a market that investors rush to in times of trouble, but the metal has lately behaved more like an industrial commodity - rising and falling with the stock market and sometimes even following the dollar. Silver rose 2.4 percent to $31.01 an ounce
INDIA SETS GOLD IMPORT LIMIT Gold prices could face from headwinds soft physical demand, as bullion consumers in India scale back their purchases. India's central bank has asked that volume and value restrictions be placed on gold imports by banks and agencies to help rein in a current account gap, which touched an all-time high in the July-September quarter. Also a potential drag on bullion was news that car sales in France and Spain in 2012 fell to the lowest levels in years.
Platinum group metals rose but were well off their session highs. Platinum was up 1.6 percent to $1,559.50 and palladium rose 2 percent to $705.97 an ounce. Platinum ended 2012 up around 10 percent, mainly driven by concerns about widespread miner strikes in top producer South Africa. Platinum is used as an auto catalyst. Prices at 12:38 p.m. EST (1738 GMT)
LAST NET PCT YTD CHG CHG CHG US gold 1688.80 13.00 0.8% 7.8% US silver 31.050 0.823 2.7% 11.2% US platinum 1560.00 21.30 1.4% 11.5% US palladium 708.60 5.25 0.8% 8.0%Gold 1687.84 13.30 0.8% 7.9% Silver 31.01 0.73 2.4% 12.0% Platinum 1559.50 24.50 1.6% 12.0% Palladium 705.97 13.97 2.0% 8.2%Gold Fix 1693.75 12.25 0.7% 7.6% Silver Fix 30.87 92.00 3.1% 9.5% Platinum Fix 1566.00 7.00 0.4% 13.4% Palladium Fix 711.00 4.00 0.6% 11.8%