Gold fell sharply on Thursday, sinking below $1,700 an ounce, as institutional investors dumped gold futures in anticipation of higher taxes next year. Political negotiations over the federal budget appeared to be at an impasse, suggesting that the U.S. might indeed go over the fiscal cliff.

Gold futures for February delivery dropped 1.2% to $1,698.40 on Thursday, according to CME Group. Gold traded as high as $1,712.80 and as low as $1,690.70. Gold bullion closed in London at $1,700, according to BullionVault.

Silver futures for February delivery fell to $32.33 per ounce. Thursday’s high for silver was $33.46, while the low was $32.29.

Gold and silver funds slid in Thursday trading.

• The SPDR Gold Trust (NYSE:GLD) dropped 0.8%.
• The iShares Gold Trust (NYSE:IAU) fell 0.9%.
• The iShares Silver Trust (NYSE:SLV) plunged 2.6%.

Gold and silver mining ETFs fell during the day.

• The Market Vectors Gold Miners ETF (NYSE:GDX) sank 2.7%.
• The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) declined 2.3%.
• The Global X Silver Miners ETF (NYSE:SIL) retreated 2.3%.

Gold mining shares dropped, with Goldcorp (NYSE:GG) falling the most.

• Agnico-Eagle Mines (NYSE:AEM) slid 1.8%.
• Barrick Gold (NYSE:ABX) fell 2.1%.
• Eldorado Gold (NYSE:EGO) dropped 3.2%.
• Goldcorp declined 3.4%.
• Kinross Gold (NYSE:KGC) also lost 3.4%.
• Newmont Mining (NYSE:NEM) moved down 2.9%.
• NovaGold Resources (NYSE:NG) sank 2.1%.
• Yamana Gold (NYSE:AUY) dipped 2.2%.

Silver mining shares moved lower on Thursday.

• Coeur d’Alene Mines (NYSE:CDE) retreated 2.9%.
• Hecla Mining (NYSE:HL) sank 3.8%.
• Pan American Silver (NASDAQ:PAAS) plunged 4.8%.
• Silver Wheaton (NYSE:SLW) declined 3.1%.
• Silver Standard Resources (NASDAQ:SSRI) fell 3.3%.

As of this writing, Christopher Freeburn did not hold a position in any of the aforementioned securities. Adrian Ash of BullionVault contributed to this report.