Precious metals fall hard

Photo: Monex

December gold fell 0.3% to $1,273.20 an ounce at 1:43 p.m. Earlier, the price touched $1,251, the lowest for a most-active contract since July 10, reports Investors.com

After the close, futures rose as high as $1,282.40 in electronic trading, up 0.5% from Monday.

Senate Majority Leader Harry Reid rejected a House plan to halt the fiscal impasse as he tried to build support for an emerging bipartisan Senate agreement to end the 15-day government shutdown and prevent a default. Without an agreement, U.S. borrowing authority lapses on Oct. 17.

"Gold is not getting many bids as people expect that some kind of a deal will be brokered before the deadline," Ed Moy, the chief strategist at Morgan Gold, an Irvine, Calif.-based investment firm that offers bullion for retirement accounts, said in a phone interview. "The market will remain volatile as it will react to every headline on the debt limit."

This year, the metal has dropped 24%, heading for the first annual decline since 2000. Some investors lost faith in gold as a store of value amid low inflation and an equity rally.

December silver slid 0.8% to $21.191 an ounce. Earlier, the price touched $20.495, the lowest since Aug. 9.