Greater confidence in the economy is leading investors to move money out of gold and into riskier assets in search of bigger profits.
Gold prices have fallen 4.2 percent since the beginning of the year as more evidence surfaced that the economy is strengthening.
More positive economic news came Thursday when The Labor Department said the number of people applying for unemployment benefits for the first time fell to the lowest point since early July 2008.
In addition, the Commerce Department said wholesale businesses increased inventories 1 percent in December. Economists consider that a healthy level for inventories.
Stocks, which are considered riskier assets than gold, have been rising since the beginning of the year. The Standard & Poor's 500 index, the most widely used measure for stocks of large U.S. companies, is up 5.1 percent so far this year.
"A lot of that flight-to-quality bid that we saw in gold over the past year has come out of the market," LaSalle Futures Group analyst Matt Zeman said. "So far, there just hasn't been a good driver to really propel it up."
Gold and silver typically are considered safer assets to hold during uncertain economic times. Many analysts believe gold prices will climb higher this year because there still are global economic issues that need to be addressed.
As an example, investors are looking for more clarity about the next steps for Egypt's government after President Hosni Mubarak agreed to transfer power to his vice president. The move comes after days of violent protests demanding Mubarak's ouster.
Gold for April delivery fell $3 to settle Thursday at $1,362.50 an ounce while March silver fell 18.2 cents to settle at $30.094 an ounce.
In other metals contracts for March, copper rose 1.95 cents to settle at $4.5435 a pound and palladium fell $5.55 to $820.90 an ounce. April platinum fell $28.60 to $1,830.80 an ounce.
Oil prices rose slightly because the developments in Egypt eased worries that oil shipments from the Middle East could be disrupted by ongoing protests.
Benchmark oil for March delivery added 2 cents to settle at $86.73 a barrel on the New York Mercantile Exchange.
In other Nymex trading for March contracts, heating oil fell 5.82 cents to settle at $2.7107 per gallon, gasoline futures lost 5.62 cents to $2.4698 per gallon and natural gas gave up 5.8 cents to $3.986 per 1,000 cubic feet.
In March agriculture contracts, wheat fell 23.25 cents to settle at $8.6275 a bushel, corn added 0.5 cent to $6.9850 a bushel and soybeans lost 18 cents to settle at $14.33 a bushel.
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