Investing.com - Gold prices dropped on Thursday as investors looked past a successful deal struck in Congress that avoided the U.S. fiscal cliff and looked ahead to a likely congressional debate over lifting the U.S. debt ceiling.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were down 0.93% at USD1,673.07 a troy ounce in U.S. trading, up from a session low of USD1,672.29 and down from a high of USD1,690.45 a troy ounce.
Gold futures were likely to test support USD1,670.95 a troy ounce, Wednesday's low, and resistance at USD1,695.35, Wednesday's high.
Gold prices soared after Congress successfully steered the country away from the fiscal cliff, a potentially recessionary combination of sweeping tax hikes and deep spending cuts due to take effect with the arrival of 2013.
However, the relief rally was short lived, as market participants quickly looked ahead to brewing fiscal uncertainty that will take center stage anew when lawmakers take up debate on raising the U.S. debt ceiling likely in February.
In 2011, Congress waited until the last minute to raise the debt ceiling, narrowly avoiding default and sending investors ditching gold and flocking to the dollar as a safety play.
Gold and the dollar trade inversely from one another.
Investors also avoided the yellow metal ahead of Friday's December jobs report, especially due to conflicting reports stemming from the labor market on Thursday.
The U.S. Department of Labor reported earlier that the number of individuals filing initial jobless claims during in the week ending Dec. 29 rose by 10,000 to a seasonally adjusted 372,000, compared with expectations for a decline of 7,000 to 355,000.
Jobless claims for the preceding week were revised up to 362,000 from a previously reported 350,000.
On a more positive note, payroll processer ADP reported earlier that non-farm private employment rose by a seasonally adjusted 215,000 in December, beating market calls for an increase of 133,000.
November's figure was revised up to a gain of 148,000 from a previously reported increase of 118,000.
Meanwhile on the Comex, silver for March delivery was down 1.01% and trading at USD30.695 a troy ounce, while copper for March delivery was down 0.66% and trading at USD3.711 a pound.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
