Investing.com - Gold prices held steady in U.S. trading on Friday as investors viewed the asset as oversold and snapped up nicely priced positions, briefly sending the yellow metal into positive territory.
Market participants spent the week stocking up on dollars due to fears the U.S. may careen over a fiscal cliff at year end when taxes are set to rise and government spending cuts take effect.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.03% at USD1,713.35 a troy ounce, up from a session low of USD1,705.55 and down from a high of USD1,716.85 a troy ounce.
Gold futures were likely to test support at USD1,705.55 a troy ounce, the earlier low, and resistance at USD1,716.85, the earlier high.
Gold gained earlier amid an otherwise bearish session for the metal thanks to uncertainty surrounding the fiscal cliff in the U.S.
Democratic and Republican congressional leaders met with President Barack Obama earlier to discuss ways to avoid the cliff, and both sides emerged afterwards expressing optimism for a deal.
Gold and the dollar trade inversely from one another, and the greenback has firmed amid safe-haven demand in recent sessions over uncertainty surrounding the fiscal cliff.
Failure to prevent taxes from rising at the same spending cuts are due to take effect could send the U.S. into a recession next year.
Bottom fishing for the metal didn't last long due to weak U.S. and European indicators.
U.S. industrial production fell unexpectedly in October, the Federal Reserve reported Friday.
Industrial production fell 0.4% following a gain of 0.2% in September, whose figure was revised down from 0.4%.
Analysts had expected industrial production to rise 0.2% in October, and the unpleasant surprise sparked a risk-off trading session that came at the euro's expense.
Superstorm Sandy disrupted business for a good chunk of the northeastern U.S. last month, which reflected in the numbers.
A separate report showed that the U.S. capacity utilization rate declined to 77.8% in October from 78.2% in September, missing expectations for an increase to 78.3%.
In Europe, the eurozone's gross domestic product contracted 0.1% in the third quarter, following a contraction of 0.2% in the preceding quarter.
While the economy shrank less than market expectations for a 0.2% contraction, the data confirmed the currency group is in a recession, which sent the euro falling and the dollar rising, a recipe for falling gold prices.
Elsewhere on the Comex, silver for December delivery was down 1.31% and trading at USD32.245 a troy ounce, while copper for December delivery was down 0.41% and trading at USD3.448 a pound.