Gold dips on progress in US budget, debt talks

Gold futures on the COMEX division of the New York Mercantile Exchange went down Tuesday on the market expectation that U.S. lawmakers will soon reach a deal to end a partial shutdown of the U.S. federal government and avert a debt default.

The most active gold contract for December delivery slipped 3.4 U.S. dollars, or 0.27 percent, to 1,273.2 dollars per ounce.

Senate Majority Leader Harry Reid said Monday he was "very optimistic" about concluding a deal this week to raise the debt ceiling and reopen the government. Echoing Reid's view, Mitch McConnell, the Senate Republican minority leader, also said that " we'll get a result that's acceptable to both sides."

House Speaker John Boehner said Tuesday that the House Republican leaders are "working with our members on a way forward. "

The growing optimism supported the dollar Tuesday, which in turn weighed on the prices of safe-haven gold.

Gold may recover, once a bipartisan deal is reached, as the market may re-focus its attention to the continued money easing policies worldwide. Market analysts believed that a deal to raise the debt ceiling may delay the Federal Reserve's pace of tapering its quantitative easing policy.

Meanwhile, physical demand for gold from China remained robust, cushioning the fall in gold prices.

Silver for December delivery dropped 16.3 cents, or 0.76 percent, to 21.191 dollars per ounce. Platinum for January delivery lost 0.1 dollar, or 0.01 percent, to 1,383.4 dollars per ounce.