UPDATE 14.45 GMT
Gold Prices fell below $1600 an ounce Wednesday afternoon in London, reversing the gains of the last week, following better-than-expected US jobs data.
Silver Prices meantime dropped as low as $27.21 an ounce – also back to where they were last week.
According to Wednesday's ADP Employment report the US economy added 163,000 private sector nonfarm jobs in July – over a third more than the consensus forecast among analysts.
The official nonfarm payrolls report is due this Friday, while the Federal Reserve announces its latest monetary policy decision later today.
EARLIER REPORT PUBLISHED 11.15 GMT
Silver Prices dropped below $28 an ounce – though they remained up on the week so far – while other commodities were broadly flat, with the exception of copper which fell following disappointing global manufacturing data.
"Investors [are] continuing to favor the US Dollar over bullion as the key safe-haven trade," says a note from ANZ Bank.
"However we see this changing in the next six months as heightened negative sentiment surrounding Europe eases and the US Dollar loses some ground to a cheap Euro."
"Gold's near-term fortunes are tied to central banks' actions," adds Sun Yonggang, macroeconomic strategist at Everbright Futures, a division of China's largest state-owned investment firm.
"As long as investors hold on to the possibility of further monetary easing, whether in the US or Europe or China, any decline in [Gold Prices] will be limited."
Following two days of meetings, the Federal Open Market Committee is due to make its latest monetary policy announcement later today.
"I think they are inching towards another round of quantitative easing, but I am not convinced they will get there at this meeting," says Paul Edelstein, director of financial economics at consultants IHS Global Insight.
"We do not expect any new initiative from the Fed," agrees Eric Green, economist at TD Securities in New York.
In addition to action from the Fed, "there's a lot of things Congress can do...to make growth stronger," said US Treasury secretary Timothy Geithner on Tuesday.
"We pay about 1 1/2 percent for a 10-year Treasury now...because fundamentally people have faith in the ability of the US to solve its problems...It's sensible for us to take advantage of this moment to do things that will make the economy stronger."
Geithner also said that leaders in Europe "have to do some more things to help support growth in the near term".
European Central Bank president Mario Draghi last week said the ECB is "ready to do whatever it takes to preserve the Euro", a statement which led to speculation that the ECB could intervene in government bonds markets.
"We are skeptical that such intervention will come as soon as this week," says Slavena Nazarova, economist at Credit Agricole.
"So there is quite a big risk of disappointment for the markets."
The ECB is due to announce its latest monetary policy decisions on Thursday.
"The ECB has become more pragmatic under Draghi," notes Berenberg Bank economist Christian Schultz, who used to work at the ECB.
"Many taboos have been shed and precedents set...the crisis has escalated to the level that the tools devised under Trichet are just not sufficient anymore, and a less dogmatic board also helps."
"Some light is appearing at the end of the tunnel," said Italian prime minister Mario Monti Tuesday, following a meeting with French president Francois Hollande.
"We are now seeing the results both in the willingness of European institutions as well as from the governments of individual countries, including Germany."
Monti, who issued a joint statement with Hollande saying they will "do everything" to save the Euro, was due to fly to Helsinki today for talks with Finnish prime minister Jyrki Katainen.
"The question is whether the Germans and the Finns have the stomach for a much looser ECB policy that is more suited to the south [of Europe]," says Jonthan Tepper, partner at economic research firm Variant Perception in London.
"So far we haven't seen much appetite for that."
German manufacturing activity continued to contract last month, according to purchasing managers index data published Wednesday. Germany's manufacturing PMI fell from 43.3 in June to 43.0, with a figure below 50 indicating sector contraction.
The overall Eurozone manufacturing sector also shrank at an accelerated rate, as did that of the UK, PMI figures show.
Over in China, official PMI data show manufacturing growth continued to slow, with the PMI falling from 50.2 in June to 50.1.
"The data flies in the face of assumptions that Beijing can simply place a floor under short term demand by pushing through approvals of scores of domestic projects," says today's currency note from Standard Bank researchers.
"Asia is finally getting caught up in the European mess with trade finally starting to buckle," adds HSBC economist Frederic Neumann.
Sales of American Eagle Gold Coins by the US Mint meantime fell by nearly 50% in July compared to the previous month. Sales of American Eagles, which are specifically minted for Gold Investment purposes, totaled 30,500 ounces last month, the lowest July total since 2007.
Sales of silver American Eagles were down 20% month-on-month, falling to just under 2.3 million ounces, the lowest July total since 2008.
Gold ETFs meantime saw a third straight monthly decline in July, losing 3 tonnes overall, according to figures from newswire Reuters. The world's biggest Gold ETF, the SPDR Gold Shares (GLD), saw outflows of 27.6 tonnes in July, a drop of 2.2%.
Silver Bullion held by the world's largest silver ETF, the iShares Silver Trust (SLV), fell 1.4% to 9687.7 tonnes.
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