NEW YORK—Gold hit the lowest price in almost four months, dragged lower as traders cashed out on concern about U.S. tax policy amid stalled talks to avert the "fiscal cliff."
The most actively traded gold contract, for February delivery, was recently down $18, or 1.1%, at $1,649.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Futures fell as low as $1,647.30 an ounce, the lowest intraday price since Aug. 22.
Gold's slide—futures on Thursday were down for a third consecutive session—has come as investors moved to the sidelines during negotiations to come up with an alternative to the fiscal cliff. Talks between President Barack Obama and House Speaker John Boehner haven't shown much progress this week after some initial optimism. The looming set of tax increases and budget cuts could push the U.S. back into recession.
Some investors, analysts and traders said, were bailing out of gold and other precious metals ahead of higher taxes on investment income expected in the U.S. in 2013.
That may "keep a damper on the price until the new year," said Miguel Perez-Santalla, a vice president with online precious metals exchange BullionVault.
Futures are up 5% in 2012 through Thursday morning, set to lock in gains for a 12th consecutive year, but well short of what many analysts expected would be a year of record-high prices. Monetary easing, deployed this year by central banks around the world to prop up economic growth, tends to draw investors worried about inflation into precious metals as a hedge. However, inflation has remained muted in much of the world, limiting gold demand.
"Finishing the year with zero-to-four percent gains is not what many had in mind when 2012 began," said Jon Nadler, an analyst with Kitco Metals, in a note.
