Gold Prices Fall on Europe's Inaction (Update 1)

Updated from 12 p.m. EDT with settlement prices

NEW YORK ( TheStreet) -- Gold prices sank Thursday as hopes for a Spanish bailout request continued to fade during a summit of European leaders.

Gold for December delivery dipped $8.30 to close at $1,744.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,753.40 and as low as $1,739 an ounce, while the spot price was falling $6.70, according to Kitco's gold index.

"Yesterday the dollar index was getting crushed, it was down 0.5%, gold couldn't even rally. So, I think the gold market has caught flu at the moment," said Phil Streible, senior commodities broker at RJO Futures. "It looks like quantitative easing isn't going to last as long in the U.S., China has had some better data ... Spain didn't get downgraded anymore, and it's kind of stagnant over there."

Silver prices for December delivery shed 36 cents to settle at $32.87 an ounce, while the U.S. dollar index was adding 0.15% to $79.20.

Jobless claims jumped 46,000 for the week of Oct. 13 after seasonal adjustments from California offset the prior week's surprise revised 27,000 claims drop. The Federal Reserve has reiterated that it's open-ended, mortgage-backed securities purchase program would end when the labor market and economy significantly improved and had held those gains for a meaningful period.

China posted a 7.4% year-over-year increase in third-quarter gross domestic product, which was what economists had predicted, according to Econoday. Further, industrial production and retail sales were better than expected. The good news from China suggested that more easing from its central bank wouldn't be an immediate priority.

European leaders were set to attend a two-day summit in Brussels, but uncertainty if Spain would request a bailout and the economic fate of Greece left investors uncertain that the meeting would produce any meaningful results.

"We await the deliberations of the leaders of Europe," said Paul Donovan, global economist at UBS. "With power concentrated into the hands of a very small number of people, there can be no informed opinion and little informed speculation on the outcome. With another summit in eight weeks, today may be about preparation."

With few major economic data points expected to report ahead of November, it appears that many investors have eyed Election Day in the U.S. as the next major turning point for gold prices. Republican nominee Mitt Romney, who is polling competitively in national polls and in major battleground states, has said he would remove Fed Chairman Ben Bernanke if he won the presidency. Such a move would leave doubts as to how long the newly implemented quantitative easing program would remain in effect. A report has suggested, though, that the open-ended program approved by the Fed was brokered by Bernanke with the possibility in mind that the plan would outlast him. In other words, the chairman worked to get a majority of Fed presidents firmly in agreement with the latest quantitative easing measure so that a new Fed leader would continue to carry on the policies.

Gold mining stocks were mostly lower Thursday. Shares of AngloGold Ashanti ( AU) were losing 6.1%, while shares of Gold Fields ( GFI) were off 4.2%.

Among other mining stocks, Barrick Gold ( ABX) was decreasing 1.9%, and Kinross Gold ( KGC) was down 1.6%.

Gold ETF SPDR Gold Trust ( GLD) was giving up 0.32%.

-- Written by Joe Deaux in New York.

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