Gold for February delivery fell $21.1 (1.2%) to settle at $1,696.8 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. Prices fell to a low of $1,690.7 during intra day trading.
On Thursday, March silver fell $1.43, or 4.2%, to settle at $32.36 an ounce. That is the lowest settlement in more than a month.
Attention of the market place has again focused to the U.S. "fiscal cliff" tax increases and spending cuts that is fast approaching. There is no apparent movement from either side on the matter. However, the lack of progress between the Obama administration and Congress as the year winds down is making traders very skittish. The overall situation continues to be a bearish drag on many markets, including the precious metals.
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The market place is still digesting the U.S. Federal Reserve decision Wednesday to end its "Operation Twist" program but extend its long-bond-buying program to the tune of $45 billion a month. That news is what many had figured the central bank would do. The FOMC also said it will begin tying interest rate policy to the U.S. unemployment rate, saying as long as unemployment is above 6.5%, rates will not rise. Wednesday's Federal Reserve developments are a bullish underlying fundamental factor for the raw commodity markets, including precious metals, due to the inflationary implications.
In overnight news, European Union finance officials have agreed on a deal that would create a single bank supervisor and EU banking union. This is a big, positive step for the EU in its three-year-old sovereign debt crisis. The news lifted the Euro currency and lowered Spanish and Italian bond yields. Also on Thursday Greece was approved to get a fresh tranche of EU bailout money.
The dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.1% on Thursday.
Among economic data expected for the day, the latest weekly initial jobless claims count totaled 343,000, which was lower than the 375,000 that had been expected. The tally was also below the revised prior week count of 372,000. As for continuing claims, they fell to 3.198 million from 3.221 million. Also, during October, inventories rose by 0.4%, which was in-line with consensus. Today's reading follows the prior month's increase of 0.7%.
Separately, November retail sales rose by 0.3%, which was slightly worse than the 0.4% increase that had been broadly expected. The prior month's reading pointed to a decrease of 0.3%. Excluding autos, retail sales were unchanged, which was in-line with expectations.
Overall producer prices declined during November by 0.8%, which was cooler than the 0.5% decrease that had been widely forecast. Core producer prices rose by 0.1%, which was in-line with the consensus.
At the MCX, gold prices for February delivery closed lower by Rs 170 (0.54%) at Rs 31,227 per ten grams. Prices rose to a high of Rs 31,386 per 10 grams and fell to a low of Rs 31,091 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed lower by Rs 1,716 (2.7%) at Rs 61,508/Kg. Prices opened at Rs 63,065/kg and fell to a low of Rs 61,415/Kg during the day's trading.
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