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silver prices

were falling on a choppy dollar after a stronger than expected reading on jobless claims.

Gold for June delivery lost $3.40 to close at $1,492.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price almost hit $1,500 today and hit a low of $1,485.80. The spot gold price was shedding $2.90, according to Kitco's gold index.

Silver prices spent the morning in the green but lost momentum, falling 16 cents to close at $34.93 an ounce.

Vote: How High Will Silver Prices Go in 2011?

Gold prices had been giving up recent gains as investors booked profits, and the move accelerated after the Labor Department said 29,000 fewer people filed for unemployment claims for the first time last week. After recent weak economic data has highlighted slowing manufacturing activity and industrial output, the better jobs data is cheering markets and weighing on precious metals. Commodities, as a whole, were also selling off Thursday.

"Dips continue to draw bargain hunter interest, both physical and investment," says James Moore, research analyst at FastMarkets, "and could indicate a period of wide range trade until economic optimism improves."

Vote: Where will gold prices finish in 2011?

But it might not be U.S. investors that gold and silver will take their cue from. The

World Gold Council

released its first quarter 2011 Gold Demand Trend report Thursday. Not surprisingly, China is showing significant demand growth, growing an average rate of 14% per year since 2001. Jewelry accounts for 64% of gold demand in the country followed by 27% for investment and 9% for technology.

Hoarding was the name of the game as investors were reluctant to part with their gold in the first quarter and were betting on higher prices. China consumed 90.9 tons of gold bars and coins while jewelry demand grew to 142.9 tons.

"We believe that Chinese gold demand could double within the next decade," the WGC said, "we would not be surprised to see this result achieved in a shorter time frame."

The report highlights rising incomes in China, the country's proclivity to buy gold as gifts and high inflation as three reasons why gold demand will stay strong. As China also seeks to tame its real estate bubble investors need another place to invest and gold looks to be the winner.

There have also been a slew of new ways to buy gold in China like the Shanghai Gold Exchange.

China Investment Corp

, a sovereign wealth fund, is a big investor in the

SPDR Gold Shares

(GLD) - Get Free Report

according to the reports, although the figure could not be verified on Bloomberg. The Lion Fund has launched a gold ETF and the ICBC and WGC teamed up to launch a 'Only Gold Gift Bar' service in the first quarter which offers an array of gold products.

Total gold demand in the first quarter was 11% year-on-year, led by a 52% increase in demand for gold bars and coins. ETF demand was negative as investors dumped holdings in January. The GLD shed 69.5 tons in the first quarter. Total investment demand grew 26% and jewelry followed with a 7% pop.

Mine production rose 7% year-on-year but overall supply fell 4% due to a lack of recycled gold and strong central bank buying.

Gold mining stocks

were mixed Thursday.

Kinross Gold

(KGC) - Get Free Report

added 0.94% at $14.98 while

Randgold Resources

(GOLD) - Get Free Report

was shedding 0.89% to $77.09. Other gold stocks,


(AEM) - Get Free Report


Eldorado Gold

(EGO) - Get Free Report

were trading at $62.66 and $15.42, respectively.


Written by Alix Steel in

New York.

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Alix Steel


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