Precious metals continue to turn pale

Gold for February delivery fell $21.8 (1.3%) to settle at $1,645.9 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. Gold fell to three and half month low figures. Prices have shed almost 3% till now this week.

On Thursday, March silver fell $1.44, or 4.6%, to settle at $29.68 an ounce. Silver has shed almost 8% in last five trading sessions.

Gold and silver markets sold off sharply on Thursday morning in the immediate aftermath of the release of U.S. third-quarter GDP data. That report was followed by other U.S. economic data on Thursday that was also stronger than expected, which prompted gold and silver to extend their already sharp daily losses.

Attention of the market place remains on the U.S. "fiscal cliff" tax increases and spending cuts that is fast approaching. The market place still reckons odds are higher than not that there will be a last-minute agreement among U.S. lawmakers to avoid the fiscal cliff. The overall situation has been a bearish drag on many markets, including the raw commodities and stock markets.

Investors appeared to be less willing to take on risk on Thursday amid an apparent impasse in negotiations to avert the so-called fiscal cliff � hundreds of billions in automatic tax hikes and across-the-board spending cuts that would take effect in 2013.

The House was scheduled to vote late Thursday on a Republican-authored bill to raise taxes on Americans earning more than $1 million a year, in a bid to increase pressure on President Barack Obama in fiscal-cliff negotiations.

In overnight news, the Bank of Japan announced another monetary stimulus plan Thursday, which was not unexpected.

The dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.06% on Thursday. It remained weak for the entire day but pared some of its weakness while going into close.

Among economic data expected for the day at Wall Street, the Commerce Department in US reported on Thursday, 20 December 2012 that the U.S. economy grew more quickly than previously stated in the July-to-September quarter due to stronger trade, faster health-care spending and increased local government construction. The report stated that the third-quarter gross domestic product grew at a seasonally adjusted annual rate of 3.1% in the third quarter, which is the fastest rate of growth since the 4.1% pickup in the final quarter of 2011. The GDP numbers were well ahead of the government's initial estimate of 2% growth or even its most recent tally of 2.7%. Market had anticipated a 2.9% reading in the third and final estimate.

The Labor Department said on Thursday that first-time jobless claims rose to a seasonally adjusted 361,000 in the week ended Dec. 15, versus a slightly upwardly revised 344,000 in the prior week. That's almost exactly in line with the consensus of 360,000. Claims have fallen sharply from the 451,000 in early November after Hurricane Sandy hit, and by now the hurricane impact looks to be absent.

Existing home sales for November hit an annualized rate of 5.04 million units, which was stronger than the rate of 4.90 million units that had been generally expected. The pace for November was up from the prior month's revised rate of 4.76 million units.

Separately, the latest Housing Price Index from the FHFA was also released. For November, the Index increased by 0.5%, which follows a 0.2% increase observed during the prior month. Also, the Philadelphia Fed Survey ticked up to +8.1 for December. This comes after November's reading of -10.7. Market had expected that the Survey would improve to a reading of -1.3.

At the MCX, gold prices for February delivery closed lower by Rs 337 (1.1%) at Rs 30,482 per ten grams. Prices rose to a high of Rs 30,969 per 10 grams and fell to a low of Rs 30,370 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed lower by Rs 2,256 (3.8%) at Rs 57,351/Kg. Prices opened at Rs 59,501/kg and fell to a low of Rs 57,223/Kg during the day's trading.

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