Updated from 12:31 p.m. EST

Geopolitical tensions and strong economic data provided opposing influences on the gold market Thursday, leading to a choppy trading session.

But in the end the economics won and February-dated bullion contracts closed down $5.20 at $628.10 an ounce on the Comex division of the New York Mercantile Exchange.

The exchange-traded funds that hold bullion were gaining, with streetTracks Gold Shares ( GLD) off 0.5% and iShares Comex Gold Trust ( IAU) edging 0.7% lower.

On the political side of the equation, Mahmoud Ahmadinejad, the president of Iran, was stirring things up in the Middle East with assertions that his country is ready for anything as it continues to defy the West in its pursuit of nuclear technology, the AP reports.

Some say the country's leaders are seeking to develop atomic weapons, while Tehran claims it only wants to beef up its ability to generate power.

Elsewhere, it seems that U.S. talks with North Korea over its push for nuclear arms have broken down after looking relatively positive a day ago. John Bolton, the one-time U.S. envoy to the Untied Nations, says progress will only come after Kim Jong-Il is ousted, according to press reports.

"It's a bit scary that they have nuclear capabilities," says James Moore, an analyst at TheBullionDesk.com. "I think North Korea and Iran and are going to add support for gold and possibly shake out some of the less convinced shorts."

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