Precious metals shed close to 1%

Gold for February delivery fell $14.2 (0.8%) to settle at $1,674.6 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. Gold ended December 2012 higher by 2.1%. Gold ended 2012 with an overall yearly gain of around 7%, which marks the 12th consecutive year the yellow metal has posted yearly gains.

On Thursday, March silver fell $0.29, or 0.9% to settle at $30.72 an ounce. Silver finished 8.3% higher for the year 2012.

Investors also looked forward to minutes from the Federal Open Market Committee's December meeting, which was due for release shortly after Thursday's Comex close. The minutes of the latest meeting of the Federal Reserve's Open Market Committee were released on Thursday afternoon and they somewhat surprisingly revealed some FOMC members believe that quantitative easing of U.S. monetary policy should be wound down during 2013. That spooked the precious metals market bulls and gave the U.S. dollar index another boost higher. The past four years of very easy U.S. monetary policy have been an underlying bullish factor for the raw commodity sector, including gold and silver.

In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies rose by 0.3% on Thursday.

In the latest report, HSBC cut its 2013 average gold price outlook on Thursday to $1,760 from $1,850, adding to the gold market's bearish sentiment.

In Europe overnight there was fresh data showing the Euro zone continues to see a very fragile financial sector. European Union bank loans to the private sector fell by 0.8% in November, on an annualized basis. Lending to businesses also declined. European stocks and the Euro currency were weaker Thursday. In Asia news, China reported its non-manufacturing PMI rose for the third straight month, to 56.1 in December. Recent economic data coming from China has been upbeat, which is an underlying bullish factor for most markets, including the raw commodities.

Among economic data expected for the day at Wall Street, ADP estimated the economy added 215,000 private-sector jobs in December, with the better-than-expected figure boding well for Friday's nonfarm-payrolls report. Market expects the government to report nonfarm payrolls rose by 153,000 last month. Separately, the Labor Department said initial claims for unemployment benefits last week jumped 10,000 to a five-week high of 372,000. Market had called for 360,000 claims.

At the MCX, gold prices for February delivery closed lower by Rs 97 (0.3%) at Rs 30,945 per ten grams. Prices rose to a high of Rs 31,165 per 10 grams and fell to a low of Rs 30,931 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed lower by Rs 287 (0.5%) at Rs 58,651/Kg. Prices opened at Rs 58,910/kg and fell to a low of Rs 58,550/Kg during the day's trading.

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