CHICAGO, Jul. 20 -- Gold futures on the COMEX Division of the New York Mercantile Exchange extended losses on Wednesday, as signs of progress on U.S. and European debt issues prompted more investors to book in profits after the recent rise in gold prices.

The most active gold contract for August delivery dropped 4.2 dollars, or 0.3 percent, to 1,596.9 dollars per ounce.

A trader mentioned that gold has suffered a severe beating after U.S. President Barack Obama said Tuesday that there had been "some progress" in talks with lawmakers about raising the U.S. debt limit and lauded a newly released Senate plan that would cut 3.7 trillion dollars from deficits over 10 years.

In the precious metal market, optimism about a debt deal helped dent the safe-haven demand, prompting investors to lock in profits, as the Aug. 2 deadline for a deal is less than two weeks away and had been a source of concern among investors.

Meanwhile, analysts also mentioned that gold also came under pressure as cautious optimism that eurozone leaders may reach a deal to ease Greece's debt problems at a summit, though concerns remained that the debt crisis could spread over to other eurozone nations.

But some traders believed that the remaining global economic risk factors make investors unwilling to short gold. "We all knew the European Union would not be instantly healed just because Greece received a bail-out package," said Mike Daly, a gold specialist with PFGbest here in Chicago.

Silver for September delivery lost 66.3 cents, or 1.6 percent, to 39.558 dollars per ounce. Platinum for October delivery lost 0. 2 dollars, or 0.01 percent, to 1,776.1 dollars per ounce.