“Gold prices surrendered early gains to hit one-month lows on Wednesday as disappointment at its failure to benefit from rising stock markets helped push the metal through key chart levels.

Spot gold fell to a low at $1,687.04 an ounce and was last down 0.7 percent at around $1,685 an ounce. U.S. gold futures were last down 0.2 percent an ounce at $1,692 per ounce.

Uncertainty over whether the United States can avoid its so-called "fiscal cliff" — $600 billion in tax hikes and spending cuts due to kick in the New Year — have kept buyers on the sidelines in recent days, leaving gold at the mercy of a relatively weak chart picture.

The wider financial markets took support from comments from China's new leader that the Chinese government aimed to stabilize exports and make policies more targeted and effective. The euro hit a seven-week high before surrendering gains, European shares rose and oil prices firmed.

But many investors are awaiting fresh news such as U.S. non-farm payrolls numbers due on Friday, a Federal Reserve policy meeting next week and the fiscal cliff negotiations before taking a position on gold.

Central Banks Drawn to Gold

South Korea's central bank said late on Wednesday it bought 14 tons of gold in November using its foreign reserves in order to spread its portfolio risks, boosting confidence that official sector interest in bullion is holding firm.

Central banks have switched to being net buyers of gold from net sellers in the last two years, with most acquisitions made by banks in Asia and the developing world. Central banks buying accounted for 455 tonnes of demand last year.

From a chart perspective, Commerzbank's technical team said it remains optimistic towards gold despite recent losses.

Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, hit a record high as the fund reported a 2.4 ton inflow on Tuesday.

On the physical markets in major consumer India, gold buyers booked deals for the peak wedding season as prices stayed near their lowest in a month.

Among other precious metals,spot silver was up 0.5 percent at $33.06 an ounce,platinum was last 0.6 percent lower at $1,570 per ounce and palladium was down 0.9 percent at $671 per ounce.”