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Gold Prices Dip on GDP Surprise (Update 1)

Updated from 11:07 a.m. EDT with settlement prices

NEW YORK ( TheStreet) -- Gold prices dipped slightly Friday as an upside surprise in third-quarter U.S. gross domestic product outweighed earlier short-covers on the yellow metal.

Gold for December delivery lost $1.10 to settle at $1,711.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,719.90 and as low as $1,701.40 an ounce, while the spot price was adding $2.10, according to Kitco's gold index.

"This has got to be some short-covering, and I'm a little surprised because the GDP number came out a little bit better than forecast," Phil Streible, senior commodities broker at RJO Futures, said in the morning. "I would have thought that gold and silver might have sold off on that type of news, because then you're going to have less chance of extended [quantitative easing]."

But gold couldn't hold its slightly higher prices and sank into the close of the commodities exchange as a positive GDP report suggested a growing trend of improvement in the United States economy.

Silver prices for December delivery closed lower by 4 cents to $32.04 an ounce, while the U.S. dollar index was down 0.02% to $80.06.

Third-quarter GDP grew at a 2% clip, which was better than consensus expectations among economists who had looked for 1.9% growth. The higher-than-expected number suggested another indicator of a slowly improving economy.

Coupled with Thursday's improving weekly jobless claims report, the Federal Reserve's pledge to end its open-ended, mortgage-backed securities purchasing program has left investors wondering as to how long the central bank would continue its stimulus plan. The Fed said so-called QE3 would continue until the economy and labor market showed substantial and sustained improvement.

Selling continued after option expiration, said George Gero, precious metals strategist at RBC Wealth Management.

Gold mining stocks were mostly lower Friday. Shares of Eldorado Gold (EGO - Get Report) were dropping about 2%, and shares of Agnico-Eagle Mines (AEM - Get Report) were off 1.1%.

Among mining stocks trading in high volumes, Barrick Gold (ABX - Get Report) was down 0.79%, while Kinross Gold (KGC) was losing 0.92%.

Gold ETF SPDR Gold Trust (GLD) was decreasing 0.05%.

-- Written by Joe Deaux in New York.

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