Commodities prices have largely been tied to the direction of equities in recent weeks, as investors worried about a weakening economy fled both stocks and futures contracts for the shelter of safer investments like cash and Treasurys. The fear is that a faltering economy will sharply curtail demand for raw materials.
But Wall Street built on its recent rally Wednesday, as investor sentiment remained upbeat in spite of weak economic reports. The Dow Jones industrials and the Standard & Poor's 500 index finished higher for the fourth straight session - an amazing feat in light of the steep losses logged last week.
But Wednesday's rally on Wall Street, which saw the Dow rise nearly 250 points, wasn't enough to lift gold prices. Weak outlooks from two of the country's top jewelry companies this week provided further evidence of a drop in demand in precious metals and sent gold prices lower.
Tiffany & Co. warned that 2008 results would come in below Wall Street's expectations. This followed Zale Corp.'s report on Tuesday that its fiscal first-quarter loss widened. The company also withdrew its profit guidance for the full year, saying it cannot reliably gauge how well it will fare during the holidays.
The crucial holiday shopping season, which unofficially begins on Friday, is expected to be the weakest in decades, as consumers grapple with rising unemployment and tightening credit.
Gold for February delivery fell $9.20 to settle at $811.30 an ounce on the New York Mercantile Exchange.
Other precious metals prices were mixed. March silver fell 3.6 cents to $10.269 an ounce, while March copper futures rose 3.75 cents to $1.6915 a pound.
The dollar rose against the euro and the British pound, but fell against the Japanese yen. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.98 percent from 3.10 percent late Tuesday.
Energy prices advanced on the Nymex, buoyed by the gains in the equities market and in response to a large interest rate cut in China.
The interest rate cut - China's biggest in 11 years and the fourth cut in the past three months - was expected to lead to increased demand for oil.
Light, sweet crude for January delivery jumped $3.67, or more than 7 percent, to settle at $54.44 a barrel.
In other Nymex trading, gasoline futures rose 8.49 cents to close at $1.1798 a gallon, and heating oil gained 3.79 cents to settle at $1.7367 a gallon.
Grain prices rose moderately on the Chicago Board of Trade.
March wheat futures gained 1.25 cents to $5.54 a bushel, while corn for March delivery rose 0.5 cent to $3.71 a bushel.
January soybeans rose 3 cents to $8.86 a bushel.