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