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Gold Prices Sink on Global Economic Concerns (Update 1)

Updated from 12:21 p.m. with settlement prices

NEW YORK ( TheStreet) -- Gold prices tumbled Wednesday as uncertainties in the United States and Europe were stoking the biggest selloff since early November.

Gold for December delivery dropped $25.80 to settle at $1,716.50 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,743.10 and as low as $1,705.50 an ounce, while the spot price was slumping $26.20, according to Kitco's gold index.

"Due to a lot of the uncertainty just in general of what the tax code will look like next year -- specifically with realized gains, or anything investment-gain related -- that you're probably seeing a little bit more selloff," said Anthem Blanchard, chief executive of Blanchard Vault.

Silver prices for December delivery lost 30 cents to close at $33.68 an ounce, while the U.S. dollar index was lowering 0.01% to $80.33.

Fiscal cliff negotiations hit a snag late Tuesday, when Senate Majority Leader Harry Reid (D., Nev.) said he was disappointed with how the talks had thus far proceeded.

"They talked some happy talk about doing revenues, but we only have a couple weeks to get something done," Reid said in public remarks. "So we have to get away from the happy talk and start talking about specific things."

Reid's remarks hold some value in them as the so-called fiscal cliff -- when tax relief measures and deep spending cuts will automatically go into effect -- is scheduled to trigger at the beginning of 2013. But various political and market analysts have said that they expect Congress will delay the need to address long-term deficit reduction and implement broad-reaching spending cuts and taxes until later in 2013, instead of risk a full cliff occurring right after December.

A full-fledged fiscal cliff, according to the Congressional Budget Office, likely would thrust the United States into a recession, which would hurt the price of gold.

"If it brings on a recession, as opposed to inflation further on, then gold is not the hedge," George Gero, precious metals strategist at RBC Wealth Management, told TheStreet on Nov. 15.

Various business CEOs met with President Barack Obama on Wednesday to discuss the fiscal cliff, but it's unclear as to what may come from these talks.

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