Gold prices closed lower on Wednesday and returned some of a rally from the prior session. A stronger U.S. dollar reduced the precious metal's hedge value. February gold closed down $5.10 at $850.10 per ounce. The metal hit as low as $843 during intraday trading. The greenback surged to a a 22-year high against the British on increased risk aversion and added to a six-week high against both the euro and Canadian loonie. On the flip side, the dollar tumbled to a fresh 13-year low versus the yen as options positions at 90 yen expired without being exercised. There was no major economic news on Wednesday. Thursday will bring housing starts data as well as jobless claims reports later in the week. On Wednesday, Morgan Stanley said gold could average $900 an ounce this year, up from a previous forecast of $750. In 2010, the precious metal was forecast to average $1,000 an ounce by the financial company. Meanwhile, UBS said it projects gold at $900 an ounce in a month and $850 in three months. Previously, UBS saw gold at $800 for both time periods. In other metal trading, copper finished at $1.43 per pound, down 7 cents on the session. The drop came as world mining leader BHP Billiton said Wednesday it would cut about 6,000 workers cue to weakening demand and the shaky world economic outlook. In energy trading,light sweet crude for March delivery finished its first day as the front-month contract at $43.55, up $2.71 for the session. Traders awaited the Energy Information Administration's weekly inventory report due tomorrow morning. Gold finished up $15.30 on Tuesday as traders flocked to the precious metal's safety appeal with stock markets tumbling around the globe. The metal gained for the second time in three sessions after a sharp decline.

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