Bullions turn little pale

Gold for February delivery fell $4.8 (0.3%) to settle at $1,709.6 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. Prices shed 0.4% last week.

On Tuesday, March silver fell 36 cents, or 1.1%, to settle at $33.02 an ounce.

The Federal Reserve's "Operation Twist" program is scheduled to end this month and the FOMC members will decide this week whether to extend a bond-buying program. Many believe the Fed will announce it will continue to purchase longer-term U.S. Treasuries, while stopping its sales of shorter-term government debt, as was the case in the Twist operations. The new plan would be ostensibly printing of greenbacks by the Fed and would be raw-commodity market bullish, including bullish for gold and silver markets.

Also in the U.S., attention of the market place remains on the "fiscal cliff" tax increases and spending cuts that is fast approaching. There is still no apparent movement from either side on the matter.

In overnight news, the feature was the German ZEW economic expectations index rising to a much higher-than-expected reading of 6.9 in December versus November's minus 15.7. The report boosted European stocks and the Euro currency, while Spanish and Italian bond yields fell.

The dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.3% on Tuesday.

Among economic data expected for the day, the Commerce Department in US reported on Tuesday, 11 December 2012 that U.S. trade deficit increased 4.9% in October to $42.2 billion, as imports of crude oil rose and American exports of manufactured goods fell to the lowest level in nearly a year. The report said that the imports of foreign goods into the U.S. declined by 2.1% to $222.8 billion in October, but exports fell by 3.6% to $180.5 billion to account for the wider trade gap. Market had forecast the trade deficit to increase to a seasonally adjusted $42.5 billion in October. The deficit in September was revised down to $40.3 billion from $41.5 billion.

Separate data showed that October wholesale inventories increased by 0.6%, which is higher than the increase of 0.4% expected by the market.

At the MCX, gold prices for February delivery closed lower by Rs 117 (0.4%) at Rs 31,376 per ten grams. Prices rose to a high of Rs 31,456 per 10 grams and fell to a low of Rs 31,320 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed lower by Rs 624 (1%) at Rs 62,234/Kg. Prices opened at Rs 62,850/kg and fell to a low of Rs 62,102/Kg during the day's trading.

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