Gold slipped to a one-month low below $1,700 an ounce on Wednesday as a weaker price forecast by Goldman Sachs triggered some fund liquidation, offsetting news of fresh central bank buying. Bullion dropped around 0.2 percent on technical weakness below its 100-day moving average. Losses accelerated after it later broke through support at Tuesday's low at $1,690.64.
Gold was pressured after Goldman Sachs cut its 2013 gold outlook and said the metal's current bull cycle will likely turn next year as rising real interest rates and better growth offset monetary stimulus from the Federal Reserve. "There is some heavy selling by fund investors and leveraged money, but physical gold demand should benefit in the long run from the fiscal cliff after these short-term fluctuations," said Miguel Perez-Santalla, a vice president of physical gold dealer BullionVault.
Spot gold was down 0.5 percent at $1,688.90 an ounce by 11:52 am EST (1652 GMT), having earlier hit a low of $1,684.40, the weakest since November 6. US COMEX gold futures for December delivery were down $4 an ounce at $1,691.80, with trading volume set to finish below its 30-day average, preliminary Reuters data showed. 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 tonne inflow on Tuesday.
Similarly, physical coin and bullion sales also received a boost from uncertainty surrounding the fiscal cliff. US Mint's November gold coin sales had their highest November performance in 14 years, while gold dealer BullionVault also said it notched net buying of nearly 18,000 ounces for a second straight monthly rise in November. The metal rose in early session after South Korea's central bank said it bought 14 tonnes of the metal in November, its fourth purchase in about 1-1/2 years.
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. Among other precious metals, silver was down 0.7 percent at $32.69 an ounce, platinum inched down 36 cents to $1,578.74, and palladium edged up 0.5 percent at $680.90.
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