Hopes of fiscal cliff solution drags gold lower

Gold prices fell on Wednesday as investors remained cautious amid uncertainty and on hopes of a fiscal cliff solution in the US, which could dent gold sentiments.

Gold futures for February 2013 contract, at MCX, were trading at Rs 30,903 per 10 grams, down by 0.49% after opening at Rs. 31,022 against the previous closing price of Rs. 30,911.

Gold futures dropped as speculators preferred to reduce their position tracking weak overseas cues.

Domestically, Delhi spot gold of 99.9 and 99.5% was at Rs 31,200 and Rs 31,000 per 10 grams, respectively.

International gold recovered a bit from yesterday's fall due to weaker dollar. Spot gold was seen trading at $1,676 an ounce.

Any further talks fiscal cliff solution could weigh on gold as investors may shift their interest to equities.

Gold for long has been considered a hedge against inflation and also yielded the best returns during the times of uncertainties.

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