Gold, silver at lowest since July, US crude extends gains

New York (Dec 4)  Gold prices hit a five-month low Wednesday as investors looked ahead to major U.S. economy data later in the week as recent signs of strength spurred expectations the Federal Reserve will soon pull back its asset purchase program.

The metal has been under pressure as markets believe a recovering economy could prompt the Fed to slow the pace of its $85 billion in monthly bond purchases as soon as December.

Investors realize the central bank will start reducing stimulus at some point, but the timing remains open to question.

Data on U.S. gross domestic product on Thursday and the nonfarm payrolls report on Friday will be closely monitored, ahead of the central bank`s next policy meeting on December 17-18.

-Spot gold fell 1% to its lowest since July 5 at $1212.53 an ounce, after rising to $1223.86 an ounce late Tuesday. The metal has hit a fresh five-month low in every session this week.

-Spot silver last traded at $19.049 an ounce, after earlier hitting a low of $18.886 an ounce, the lowest since July 6.

Holdings in SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, fell 1.80 tonnes on Tuesday to their lowest since early 2009 at 841.41 tonnes.

A record outflow of 460 tonnes from the fund this year has helped fuel a 27 percent decline in gold prices so far.

Physical buying, which tends to provide a floor to prices, has failed to pick up in a big way in recent weeks as most consumers had bought a lot more than necessary during earlier price drops this year, dealers said.

They are now waiting on the sidelines expecting further declines in prices, according to dealers.