Debt deal talks sink gold price

Shortly after the opening of trade in New York on Friday the gold price plunged more than $30 an ounce to an almost three-month low of $1,259.60 an ounce.

The sell-off came on the possibility of a breakthrough in the impasse in Washington, after meetings between the Republican Party and President Obama late Thursday and early Friday.

In New York morning trade gold for delivery in December had recovered some of its initial losses to change hands at $1,266, but in contrast to the 300+ rally in Dow Jones Industrial average, the market for gold seems to be in the grip of the bears.

The ongoing political crisis in the US had been expected to boost gold's allure as a safe haven asset, but the metal could not capitalize on a second week of the government shutdown or the US debt ceiling worries.

The metal is down more than 4% since September 30, the day before the US government shutdown kicked in.

Year to date the gold price has retreated more than 23% and looks set to end its more than a decade long bull run in 2013.

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