NEW YORK/LONDON: Gold fell on Wednesday as the dollar strengthened, hurt by easing US consumer prices and uncertainty after a clash between France and Germany over whether the European Central Bank should do more to stem the region's debt crisis.
Bullion, used as an inflation hedge by investors, slipped on news that US consumer prices fell in October for the first time in four months, reinforcing the view that inflation is poised to trend lower.
Also pressuring gold was euro's third consecutive day of decline against the dollar amid European debt fears. France, which has been facing rising borrowing costs as its "AAA" credit rating was at risk, appeared to plead for stronger ECB action, but Germany disagreed with that view.
"Cautionary selling in gold continued after more euro zone headlines negatively affected the outlook for economic recovery and reform there. More portfolio managers are opting for cash and not entering into any risk," said George Gero, vice president of RBC Capital Markets.
Spot gold was down 0.6 percent at $1,771.20 an ounce by 12:31 p.m. EDT (1731 GMT).
Earlier in the session, bullion fell toward $1,750 an ounce, moving in tandem with weak equity markets.
Gold, a traditional safe haven which has recently performed more like a riskier asset, was about 1 percent lower in the last three sessions.
US gold futures for December delivery were down $10 at $1,772.20 an ounce. COMEX futures volume was in line to exceed its 30-day average for the first time in a week, breaking a trend of slower trading pace.
Silver fell 1.7 percent to $33.92 an ounce.
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