Gold for February delivery fell $3 (0.2%) to settle at $1,667.7 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Gold fell to three and half month low figures.
On Wednesday, March silver fell $0.55, or 1.8%, to settle at $31.12 an ounce.
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.
Wrangling in Washington continued over a deal to avert steep spending cuts and tax increases, known as the fiscal cliff, set to begin next month. On Tuesday, House Speaker John Boehner floated a plan to increase taxes on incomes of $1 million and above.
Ideas the U.S. fiscal cliff matter will be resolved on time, improving investor sentiment regarding the European Union debt crisis, better economic data coming out of the U.S. and China, and no fresh flare-ups in the Middle East in recent weeks have somewhat becalmed the market place.
In overnight news, the Euro currency hit a fresh seven-month high and European stocks rallied in the wake of a big credit rating upgrade for Greece by Standard & Poor's. There was also a positive German Ifo report for December released Wednesday. On the negative side, the Euro zone construction industry showed its sharpest decline in several months in October. Reports also said Spain's prime minister will not request fresh European Union bailout funds at this time, but may in the future.
The dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.3% on Wednesday.
Among economic data expected for the day at Wall Street, November housing starts hit an annualized rate of 861,000 units and the number was below the 875,000 forecast. Meanwhile, building permits came in at 899,000, which was ahead of consensus which expected a reading of 876,000.
At the MCX, gold prices for February delivery closed lower by Rs 237 (0.8%) at Rs 30,819 per ten grams. Prices rose to a high of Rs 31,022 per 10 grams and fell to a low of Rs 30,760 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed lower by Rs 1,080 (1.8%) at Rs 59,607/Kg. Prices opened at Rs 60,556/kg and fell to a low of Rs 59,525/Kg during the day's trading.
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