Investing.com - After falling during Thursday's U.S. session, gold futures continued to cascade lower in the early part of Friday's U.S. session after the Federal Reserve implied that it is running out of monetary easing ammunition.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery plunged 1.47% to USD1,649.95 per troy ounce in Asian trading Friday. During the U.S. session, gold fell 0.93% to settle 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.
It would appear that any fiscal cliff-related enthusiasm traders had for the yellow metal has quickly waned and that market participants have turned their attention to the looming debt ceiling debate U.S. policymakers must confront sometime in the next several weeks. The debt ceiling is defined as how much debt the U.S. can carry at any one time and failure to raise the debt limit risks could prompt further downgrades to an already vulnerable U.S. sovereign credit rating.
During Thursday's U.S. and European sessions, gold was also pressured by some cautious price forecasts from global banks. HSBC is forecasting gold will USD1,760 per troy ounce this year, which if that is accurate, would extend bullion's annual winning streak to 13 consecutive years. However, that price target is down from the bank's previous estimate of USD1,850.
HSBC kept its 2014 price target for gold of USD1,775 per ounce unchanged. Credit Suisse was a bit less optimistic, forecasting gold will average USD1,740 per ounce this year before falling to USD1,720 next year. Worse yet, the Swiss bank sees gold tumbling to USD1,500 per ounce in 2015.
Elsewhere, Comex silver for March delivery plunged 4.1% to USD29.453 an ounce while copper for March delivery slid 0.38% to USD3.679 per ounce.
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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.