Gold for February delivery was shedding $6.30 to $1,689.50 per ounce at the Comex division of the New York Mercantile Exchange. The
The $1,686 price was the lowest level seen for the yellow metal since Election Day on November 6, when gold surged by more than $30 per ounce to break away from a then intraday low of $1,683.50.
"We obviously broke through some support levels, and then it stopped behaving as well as we'd like it to -- being below $1,700 per ounce," said Oliver Pursche, co-portfolio manager at GMG Defensive Beta Fund.
Whereas a stall in fiscal cliff negotiations and some possible institutional selling of gold (realizing the yellow metal may not reach previously expected higher prices by year-end) plunged the precious metal on Tuesday by more than $25, Wednesday's action saw the commodity slightly fall against a strengthening dollar.
Gold benefited early in the trading session from new Chinese Communist Party Chief Xi Jinping announcing that the country would consider more infrastructure investment.
The possibility of Chinese stimulus to infrastructure could have a positive effect on gold as an inflation hedge, should the government there implement the program.
The gold price began to slump back toward the flatline shortly before Automatic Data Processing's employment change report said the United States added 118,000 jobs in November. Economists had predicted some 125,000 jobs.
A Goldman Sachs research note on Wednesday said that it is seeing growing downside risks for gold in 2013 as its analysts have forecast improving conditions in the US economy.
"In the short term, the combination of more easing and weaker growth should prove supportive to gold prices although our modeling suggests that these catalysts are to some extent already priced in. Medium term, however, the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in US real rates on better US economic growth," the research note said.
The bank lowered its forecast for three-, six-- and 12-month Comex gold prices to $1,825, $1,805, and $1,800 per ounce, respectively, from $1,840, $1,940, and $1,940 per ounce.