LOS ANGELES (MarketWatch) — Gold futures stumbled Thursday, and silver prices dropped for a sixth straight session, as U.S. budget talks stalled and the Commerce Department raised its estimate of third-quarter growth for the largest global economy.

Gold for February delivery US:GCG3 fell $21.80, or 1.3%, to $1,645.90 an ounce on the Comex division of the New York Mercantile Exchange. Gold was on pace for a weekly loss of 3%.

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Silver, which tends to track moves in gold but is historically more volatile than its counterpart, led the declines among the metals.

March silver futures US:SIH3 sank $1.44, or 4.6%, to $29.68 an ounce. Silver hasn’t settled below $30 an ounce since late August. Prices for the metal have dropped 8% in five trading sessions.

“With Japan and Europe in recession, and the prospect of spending cuts contributing to a reduction in U.S. GDP, gold may continue to struggle for the foreseeable future,” said Sonny Tahiliani, managing director of MacroMoves in New York. “But eventually, there will be a reflationary response from the Fed to prevent recession since an output gap in the U.S. persists.”

On Thursday, the Commerce Department said third-quarter gross domestic product grew at a seasonally adjusted annual rate of 3.1%, well ahead of the initial estimate of 2% growth and the most recent tally of 2.7%. See: Third-quarter U.S. growth revised higher.

The stronger-than-expected GDP growth figure “seems to have knocked gold and silver lower again and sent them through some key support levels,” emailed Ben Traynor, chief economist at BullionVault.

“The obvious narrative is that a stronger economy will bring forward the day when the Fed eventually starts unwinding its ultra-loose monetary policy,” wrote Traynor, who noted that federal, state and local government spending were big factors behind the latest growth figure. But together with a slowdown in export growth, “and the details of today’s report suggest that while there was a lot of spending going on in Q3, much of it was on things that are unlikely to foster sustained growth for the long run.”

‘Soft’ end to the year

Gold futures have fallen by nearly 2% over the past two trading sessions. They closed Wednesday at $1,667.70 an ounce, the lowest settlement price since Aug. 30. Still, prices for the precious metal are more than 4% higher for the year to date.

“Too much has been made of regarding the fiscal cliff, which is really just the equivalent to 5% of GDP — as such, we seem to be seeing some selling by disappointed longs plus a little profit-taking,” said Ross Norman, chief executive of Sharps Pixley, in emailed comments.

Investors appeared to be less willing to take on risk Thursday amid an apparent impasse in negotiations to avert the so-called fiscal cliff — hundreds of billions in automatic tax hikes and across-the-board spending cuts that would take effect in 2013.

The House was scheduled to vote late Thursday on a Republican-authored bill to raise taxes on Americans earning more than $1 million a year, in a bid to increase pressure on President Barack Obama in fiscal-cliff negotiations.

House Speaker John Boehner said at a news conference he’s confident the “Plan B” bill to extend Bush-era tax cuts for incomes up to $1 million will pass, and urged the Senate to support the bill. President Barack Obama has said he would veto the measure. See: Republican 'Plan B' heads for House vote.

In recent days, equities and other riskier assets had been moving higher on indications that the two sides were inching toward a deal.

Reuters

For now, “short sellers, technical and momentum traders have the upper hand and are pressing their advantage in these less liquid holiday markets,” wrote Mark O’Byrne, research director at Dublin-based GoldCore, in an email.

In other metals trading, copper for March delivery HGH23, fell 7 cents, or 1.9%, to $3.54 a pound.

January platinum US:PLF3 lost $46.70, or 2.9%, to $1,546.20 an ounce, and March palladium US:PAH3 fell $18.10, or 2.6%, to $680.25 an ounce,