Gold Prices Plunge After White House Rejects Boehner Offer (Update2)

(Updated from 12:32 p.m. EST with settlement prices and China soybean cancellation.)

NEW YORK ( TheStreet) -- Gold prices plummeted Tuesday after the White House rejected House Speaker John Boehner's "Plan B" budget deal.

Gold already had been lower as so-called fiscal cliff talks continued to flounder ahead of the holiday week, and after China terminated a large soybean order.

Gold for February delivery shed $27.50 to settle at $1,670.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,704.40 and as low as $1,662 an ounce while the spot price was down $28.70, according to Kitco's gold index.

"The Chinese canceled the soybean order -- that's a big deal," said George Gero, precious metals strategist at RBC Wealth Management. "It's an economic indicator that if they're trying to cool off, that's anti-recessionary, anti-inflationary."

The yellow metal dived to its lowest intraday levels shortly after the White House's statement.

The silver price for March delivery reversed morning gains as it slid 61 cents to close at $31.67 an ounce, while the U.S. dollar index was dropping 0.3% to $79.35.

The U.S. dollar has fluctuated on many of the public appearances by President Barack Obama, House Speaker John Boehner and Senate Majority Leader Harry Reid, whose announcements have fluctuated between progress and stalemate in the budget negotiations.

Boehner emerged Tuesday to tout his "Plan B" budget deal -- raising rates on those earning $1 million or more, implementing $1 trillion in spending cuts and locking in a process for tax and entitlement reform in 2013 -- and to criticize the president for his lack of a balanced approach.

With the holiday week ahead and the end of the year less than 14 days away, trading could be slowing for the yellow metal into the beginning of 2013.

Eurozone matters have remained relatively silent since finance ministers there reached an emergency loan agreement for Greece, and since Spanish banks requested a bailout.

Traders of the precious metal received a bit of price-positive news over the weekend when Japan's Liberal Democratic Party reclaimed majority power in the National Diet. The victory signaled a more stimulus-friendly party that may consider the implementation of new stimulus to try and boost sluggish economic activity in the country.

Many investors view monetary and fiscal stimulus as inflationary policies, which would make gold an asset hedge.

Gold-mining stocks were mostly lower Tuesday. Shares of NovaGold Resources ( NG) were losing 3.8%, while shares of Eldorado Gold ( EGO) were off 4.5%.

Among volume leaders, Barrick Gold ( ABX) was shedding 1.9%, and Kinross Gold ( KGC) was declining 2.1%.

Gold ETF SPDR Gold Trust ( GLD) was sinking 1.7%, while iShares Gold Trust ( IAU) was dropping 1.8%.

-- Written by Joe Deaux in New York.

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