Gold prices dropped to a one-week low in heavy trade on Thursday as worries about an economic slowdown in Europe and fear of a recession in the United States hit bullion's inflation-hedge appeal. "Uncertainty surrounding the 'fiscal cliff' continues to pressure gold, as increased taxation implies a more austere government," said Jeffrey Sherman, commodities portfolio manager at DoubleLine Capital which has $50 billion in assets under management.
Spot gold fell 0.7 percent to $1,713.99 by 2:32 PM EST (1932 GMT), partially recovering after hitting a one-week low of $1,704.69. US COMEX gold futures for December delivery settled down $16.30 an ounce at $1,713.80. Trading volume was on track to top 200,000 lots, their highest in more than a week and about 15 percent above the 250-day average, preliminary Reuters data showed. Silver dropped 0.6 percent to $32.38 an ounce. Among platinum group metals, platinum dropped 1 percent to $1,567.49, while palladium eased 12 cents at $603.80.