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Gold settles lower on hopes of US deal to avert default

Source: World Gold Council

Gold ended lower after a day of choppy trading on Thursday, on signs that lawmakers in Washington might reach a deal to avert a potential U.S. debt default, which boosted the dollar and discouraged safe-haven bids.

On Thursday, Republicans in the House of Representatives offered President Barack Obama a short-term increase in the federal debt limit if he will agree to negotiate with them on a broad range of financial issues.

Bullion was on track to fall for a third consecutive day, while the S&P 500 equities index rallied almost 2 percent and the dollar index trimmed initial gains but stayed higher.

Gold futures trading volume has been light this week. Prices remained rangebound, with buyers on the sidelines due to a lack of U.S. data and anxiety over the deadlock in Washington.

Gold will retain its value: Pro

"When you don't have the big buyers coming in, it takes a lot to lift the market when you are relying on smaller players and physical buyers,'' said Thomas Capalbo, a precious metals broker at New York futures brokerage Newedge.

Spot gold fell 0.8 percent to $1,296 an ounce. for December delivery settled $10.30 lower at $1,296.90 an ounce.

Gold's losses were limited by data that showed U.S. weekly jobless claims touched a six-month high last week as a computer-related backlog of claims was processed and a partial U.S. government shutdown began to hit some non-federal workers.

—By Reuters.

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Chart: Precious Metals