Gold and silver slumped to their lowest prices in almost four months as investors cashed out in anticipation of higher taxes in 2013 on investment income from the precious metals.

Though tax policy is still a subject of negotiations between the White House and congressional Republicans, a set of new or increased taxes is due to come on line next year, including higher rates on returns from gold exchange-traded funds and physical bullion, and on general investment income for high-net-worth individuals.

Gold has settled lower for three consecutive sessions amid fading hopes for a federal budget deal to avert the automatic tax increases and spending cuts set to take effect in January.

The most actively traded gold contract, for February delivery, fell $US21.80, or 1.3 per cent, to settle at $US1645.90 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest since late August.

Silver, which had held larger gains than gold after rallying in September and October, dropped 4.6 per cent.

About half of global silver production is consumed by industry, including in electronics, solar panels and photography, and the chance that the fiscal cliff would hamper growth in the world's largest economy has sent investors to the exits.

Silver for March delivery fell $US1.438 to settle at $US29.678 an ounce on the Comex, the lowest since 22 August.