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Gold Plunges Below $1,700 Amid 'Fiscal Cliff' Worries

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Gold plunged below $1,700 an ounce Thursday morning — sliding $27 to $1,690.70 session low — as traders turned from enthusiasm over the the announcement of more monetary stimulus from the U.S. Federal Reserve to fears about the looming "fiscal cliff."

"QE is supportive but it's not immediately bullish," said COMEX floor trader Kevin Grady, president of Phoenix Futures and Options. "And the lack of global inflation is a trigger for liquidating longs."


Fed Chairman Ben Bernanke warned Wednesday the Fed could do little to repair the damage from Congress and the president failing to come an agreement on the tax and spending cuts, which would result in falling over the fiscal cliff.

"His explanation of what he is doing and why yesterday was so scary that even gold wouldn't keep going up," wrote Hedgeye Risk Management CEO Kevin McCullough in a note to clients this morning.

Traders are cashing in profits as well, with gold up 8.5 percent so far this year.

Technically, traders see near-term weakness in gold, with the next key support level at $1,684 an ounce.

—By CNBC's Sharon Epperson; Follow her on Twitter: @sharon_epperson

Disclaimer

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.