* Spot gold to test support at $1,701/oz - technicals
* Amplats says output at S. Africa mines yet to start
* China's Jan-Sep gold output up 11.3 pct on year - govt
By David Brough
LONDON, Nov 16 (Reuters) - Gold erased losses and steadied
at around $1,715 an ounce on Friday, but was on course for a
weekly loss as investors focused on uncertainty over global
growth and worries over the U.S. "fiscal cliff" when $600
billion worth of tax increases and deep spending cuts will set
in early next year.
Spot gold was flat at $1,715.21 an ounce at 1452 GMT,
and was on track for a weekly loss after prices climbed more
than 3 percent last week.
U.S. gold was up $1.30 at $1,715.10.
Gold had slid more than 1 percent to a one-week low on
Thursday following falls in equity markets.
World shares were headed for a second consecutive weekly
loss on Friday as uncertainty over U.S. budget talks, a weak
economic outlook and violence in the Middle East weighed on
Gold had edged down earlier on Friday as some investors
liquidated profits from bullion to cover losses in other markets
such as equities.
Later, gold failed to react to an unexpected drop in U.S.
industrial output in October.
Matthew Turner, analyst with Mitsubishi, said the lack of a
gold price reaction could be because the market was trying to
assess the impact of superstorm Sandy on the data.
"It's confusing data because of the effect of the
hurricane," he said.
Industrial production contracted 0.4 percent last month
after a revised 0.2 percent increase in September, the Federal
Reserve said on Friday.
The Fed said the storm, which tore through the East Coast at
the end of October, is estimated to have reduced the rate of
change in output by nearly 1 percentage point.
The gold market's attention is largely focused on the budget
talks between U.S. President Barack Obama and Congressional
leaders. As the two sides prepared for the talks on Friday aimed
at preventing the U.S. economy from falling back into recession,
Democrats and Republicans dug in on their long-held opposing
Gold's safe haven status would shine in the case of failed
talks and political paralysis, while success in avoiding the
fiscal disaster may dampen sentiment in gold, analysts said.
Technical analysis suggested spot gold could test support at
$1,701 an ounce, a break below which will open the way towards
$1,672.24, according to Reuters market analyst Wang Tao.
Gold has drifted over the past week or so as support from
President Obama's re-election faded and political uncertainty
around the fiscal problems kept some investors on the sidelines.
But gold investment demand remains resilient. Holdings of
the SPDR Gold Trust GLD, the world's largest gold-backed
exchange-traded fund, rose to 1,339.616 tonnes by Nov. 15, just
a touch off the record high of $1,340.521 tonnes hit in October.
China produced 38.5 tonnes of gold in September, bringing
total output in the first eight months of the year to 288.2
tonnes, up 11.3 percent from a year ago, the Ministry of
Industry and Information Technology said on Friday.
Oil rose towards $109 a barrel on Friday as a showdown
between Israel and the Palestinians stoked worries about supply,
but ample stockpiles and concern about the well-being of the
global economy tempered gains.
SOUTH AFRICAN STRIKES
Platinum group metals prices came under downward pressure
after the end of strikes that had swept South Africa's mining
Platinum eased 0.99 percent to $1,553.75, while
sister metal palladium was last at $627.50, down 0.27
Anglo American Platinum said on Friday production
at its South African operations where workers went on an illegal
strike will not resume in the coming week because of safety
Silver was down 0.21 percent at $32.52 an ounce.