All news is now bad news for gold as price drops 2%

The spot gold price dipped below the $1,300 an ounce level for the first time in a week, failing as much as $30 an ounce to a session low of $1,295.30 on Wednesday.

A number of factors that should have boosted the price of the precious metal appeared to have the opposite effect on the day.

Conventional wisdom suggests the ongoing political crisis in the US should convince investors to buy gold as a safe haven asset.

The gold fear trade has not happened.

The metal is down more than 2% since September 30, the day before the US government shutdown kicked in and traders seem to be pricing in a resolution to the debt ceiling negotiations before the 17 October deadline.

The news that noted dove Janet Yellen will be announced as the new Federal Reserve chair should also have sent investors scurrying for gold.

Yellen is replacing Chairman Ben Bernanke, whose second term runs out in January next year, and she is considered one of the strongest supporters of the Fed's economic stimulus and a prime architect of the Fed's quantitative easing program.

Commentators agree that with Yellen steering the central bank, the QE program will stay in place for longer with the easy money flooding financial markets topping $4 trillion by year-end.

The ultra-loose monetary policy in the US weakens the dollar and increases the risk of inflation, but gold's status as a storer of wealth and hedge against inflation has been greatly diminished this year.

Gold is down 21.7% year to date and is on course to break its 13-year bull run in 2013.