Gold Prices Slip on Moody's Downgrades of France, U.K.

Gold prices slipped Tuesday on Moody's downgrades of France and the U.K. as well as the firm's warning that the ratings of several more European nations could also be cut.

Moody's Investors Service downgraded Britain and France from their AAA ratings and warned that Italy, Spain, Portugal, Slovakia, Slovenia and Malta could face lower ratings.

Meanwhile, Germany said it wouldn't approve a $172 billion aid package for debt-strapped Greece -- despite the recent approval of a severe austerity package -- until it becomes clear how many of that country's creditors will accept less than full payment on their Greek bonds. That won't be known until early March.

It is widely understand that without that $172 billion, Greece will default sometime next month, a prospect that dominates the market's mood.

In the short term, gold looks hostage to swings in investor risk sentiment regarding the EUR and the Eurozone sovereign debt situation, in which the focus is centered largely on Greece, James Steel, an HSBC analyst, said in a note.

The only development overnight that lifted market sentiment was a surprise announcement by the Bank of Japan that it will buy more government bonds and keep short-term interest rates near zero.

Crude oil fell to $100.83 per barrel and copper slipped to $3.84.

Asian and European stock indexes were all lower and U.S. futures pointed to a lower open.

Gold for April delivery declined $3.60 to $1,720.40, while spot gold fell $3.73 to $1,721.01.

Silver for March delivery slipped 22 cents to $33.51, while spot silver was off 17 cents to $33.59.