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Gold falls as US budget talks continue

Published on NewsOK Modified: December 18, 2012 at 3:41 pm •  Published: December 18, 2012

The price of gold fell Tuesday on expectations that lawmakers are closer to a budget agreement.

Gold for February delivery fell $27.50 to finish at $1,670.70 an ounce.

With two weeks left to resolve their differences, President Barack Obama and House Speaker John Boehner made some concessions but held their ground on other issues. That created expectations that the two were making progress toward a compromise.

If the two sides fail to reach an agreement before Jan. 1, tax increases and government spending cuts will take go into effect, an outcome that has been dubbed the "fiscal cliff." Some economists believe that could push the country into a recession.

A new budget will make it less likely that the Federal Reserve will have to take additional steps to promote the economy. Such Fed measures typically benefit gold, said Dave Meger, a vice president of metals trading at Vision Financial Markets.

"The closer we get to some type of resolution takes away a bit of that possibility and hence is ... less supportive of gold," he said.

Industrial metals also fell in part because of the drop in gold prices. It also is the time of year when trading is light in metals, Meger said.

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