Gold drops on US budget deal

Gold futures on the COMEX division of the New York Mercantile Exchange dropped Wednesday as U.S. House and Senate negotiators have reached a budget deal. The most active gold contract for February delivery lost 3.9 dollars, or 0.31 percent, to settle at 1,257.2 dollars per ounce. House Budget Committee Chairman Paul Ryan and Senate Budget Committee Chairman Patty Murray announced Tuesday night that they had struck a deal to set spending levels for the next two years and replace some automatic budget cuts. Though the deal still needs to be approved by both chambers of Congress, it has nonetheless headed off the threat of a government shutdown in January, and therefore dampened the investment demand for gold. The fact that the U.S. Federal Reserve likely scaling back its bond purchases at its meeting next week is another concern weighing on investors. Market analysts hold that if the Fed decides to scale down its bond purchases at its upcoming two-day monetary policy meeting, which is highly possible, gold prices will again come under selling pressure. Some market analysts believe that gold prices may rise to around 1,500 dollars per ounce before falling again in 2014. Silver for March delivery gained 4.1 cents, or 0.2 percent, to close at 20.356 dollars per ounce. Platinum for January delivery lost 3.5 dollars, or 0.25 percent, to close at 1,385.2 dollars per ounce.