Gold prices to a one-month low on Wednesday, falling below the key $1,700 an ounce level. This is the second day prices fell. The strength of the US dollar pressured gold since the two assets usually have an inverse price relationship.
Gold futures for February delivery lost 0.1 percent to settle at $1,693.80 an ounce on the Comex division of the New York Mercantile Exchange. Prices had briefly touched a high of $1,708.30 and fell to as low as $1,686. Gold futures for December delivery were down $4 an ounce at $1,691.80.
Spot gold was down 0.5 percent at $1,688.90 an ounce by 11:52 a.m. EST (1652 GMT), having earlier hit a low of $1,684.40, the weakest since November 6.
The precious metal will likely remain under pressure until there is more clarity over the US fiscal cliff negotiations. Republicans and Democrats dug in on budget talks to avoid the $600 billion in tax hikes and spending cuts due to kick in the New Year on Wednesday, with both sides urging quick action but offering no compromises in a political stare-down that shows no signs of breaking.
Also gold prices depend on if central bank purchases of gold will continue. This would be positive for gold.
On Wednesday, Goldman Sachs lowered its price forecasts for gold in 2013, citing growing downside risks to the metal’s price. This news also accelerated the decline gold prices as it triggered some fund liquidation.