Gold drops to four-week low on budget talks

LONDON: Gold today fell to a four-week low, dropping below $1,700 an ounce, as a stalemate in US budget talks weighed on commodities.

Gold dropped 0.6 per cent to $1,705.41 an ounce. Prices reached $1,696.78, the lowest since November 6. Silver also fell 1.1 per cent to $33.29 an ounce.

Commodities retreated for the first time in four days as talks over the so-called fiscal cliff of spending cuts and tax increases remained deadlocked.

European Union finance ministers meet today to discuss measures to stem the debt crisis. Bullion pared some losses as the dollar reached a six-week low versus the euro.

Holdings in gold-backed exchange-traded products climbed 1.7 tonnes to a record 2,623.4 tonnes. Prices are up 9.1 per cent this year as central banks from Europe to China pledged more steps to spur economic growth.