PRECIOUS-Gold Bounces on U.S. Dollar but Near 4-month Low

SINGAPORE, Dec 19 - Gold regained strength on Wednesday as the U.S. dollar weakened against the euro, but the metal was still within sight of its weakest in nearly four months after signs of progress in the U.S. fiscal talks dented its safe haven appeal.
      
FUNDAMENTALS
* Gold added $5.85 an ounce to $1,675.39 by 0032 GMT after falling to $1,661.01 on Tuesday, its lowest since August on technical selling and growing hopes U.S. legislators are closer to reaching a deal that would avert a fiscal crisis next month.
    
* U.S. gold futures for February rose $6.20 an ounce to $1,676.90.    
    
* U.S. House of Representatives Majority Leader Eric Cantor said he expects a vote on a Republican offer to avert the "fiscal cliff" on Thursday, and he expects to have enough votes to pass the measure.
     
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MARKET NEWS
* The euro hovered at multi-month highs against the dollar and yen on Wednesday, having extended recent gains as tentative signs of progress in the U.S. fiscal talks bolstered demand for riskier assets. A weaker dollar makes dollar-priced gold cheaper for holders of other currencies.
   
* Japan's Nikkei share average is set to test eight-month highs above 10,000 on Wednesday as investor appetite is boosted by signs of progress in the U.S. fiscal talks and expectations of aggressive monetary easing under the new Japanese government.
 
     
    DATA/EVENTS
    0900  Germany   Ifo business climate   Dec                 
    0900  Germany   Ifo current conditions Dec                 
    0900  Germany   Ifo expectations       Dec                 
    1330  U.S.      Build permits: change mm   Nov        
    1330  U.S.      House starts mm: change    Nov       
    1330  U.S.      Housing starts number mm   Nov       
    1200  U.S.      Weekly mortgage market index
    N/A   Bank of Japan begins two-day policy meeting
    PRICES
       
  Precious metals prices 0032 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1675.39    5.85   +0.35      7.14
  Spot Silver        31.76    0.14   +0.44     14.70
  Spot Platinum    1595.00    4.00   +0.25     14.50
  Spot Palladium    687.50    1.00   +0.15      5.36
  COMEX GOLD FEB3  1676.90    6.20   +0.37      7.03         3534
  COMEX SILVER MAR3  31.82    0.15   +0.46     13.97          761
  Euro/Dollar       1.3227
  Dollar/Yen         84.37