“Gold prices fell more than 1 percent to their lowest in nearly a month on Tuesday, with uncertainty over stalled U.S. budget negotiations denting investor fervor for the metal.

Dealers say confidence in gold has been eroded by memories of last December's 10 percent price slide and disappointment that prices failed to break $1,800 an ounce when the United States announced a third round of monetary easing in September.

Spot gold fell as low as $1,690.64 an ounce and was down more than a percent below $1,697 an ounce in late morning trading, while most-active U.S. futures contract were down 1.2 percent at $1,700.10, having earlier dropped to a near one-month low of $1,692.60.

Wall Street struggled for traction at the open, with the market hostage to negotiations in Washington on how to avert a "fiscal cliff" -- $600 billion of impending tax hikes and spending cuts that could push the U.S. economy into recession.

Republicans in Congress proposed steep spending cuts to bring down the U.S. budget deficit on Monday but gave no ground on President Obama's call to raise taxes on the wealthiest Americans, and the proposal was dismissed by the White House.

Investors are divided over the potential impact of negotiations on gold, leaving it hostage to technical pressures.

Gold broke below $1,710 an ounce and subsequently $1,705 in Asian trade, key chart levels it had held since early November, which triggered stop-loss selling, traders said.

A break of key pychological support at $1,700 and a move below the metal's 100-day moving average at $1,695 for the first time since mid August accelerated selling, taking prices to a low of $1,690 an ounce.

Payrolls Eyed

Gold investors are now focusing on the outlook for U.S. non-farm payrolls data on Friday, due to the link between job creation and monetary policy. A dearth of new jobs could mean that the current ultra-loose monetary policy will persist.

A recent drop in rupee-priced gold due to a stronger local currency has attracted buyers in India, while physical demand in the rest of Asia remained lacklustre as market participants wait for a clear direction in prices.

Russian gold companies increased gold production by 5.2 percent in the first ten months of 2012 compared to the same period of last year, the industry lobby said on Tuesday.

Spot silver was down about 1.6 percent, trading around $33.07 an ounce.

Spot platinum dropped to a one-week low of $1,576.20 an ounce before recovering to trade above $1,584, down more than one percent. Spot palladium, which has risen for the past five weeks, also slid by one percent to trade near $678.”