Gold for February delivery dropped $21.10 to finish Thursday at $1,696.80 per ounce.
Investors are uncertain about what's ahead if Republicans and President Barack Obama fail to agree on a new budget. Without an agreement, tax increases and spending cuts will take place Jan. 1 that many economists believe could send the U.S. into a recession.
The Federal Reserve has announced measures to support the economy but predicts growth will be no more than 3 percent in 2013.
In other trading, prices are lower for industrial metals, oil, wholesale gasoline, wheat and corn. Orange juice futures and soybeans are higher.