By Frank Tang and Jan Harvey

By Frank Tang and Jan Harvey

NEW YORK/LONDON (Reuters) - Gold dipped below $1,200 an ounce on Thursday and silver plunged 4 percent to its lowest since March 2010, a day after the U.S. Federal Reserve gave upbeat comments about economic growth and ended its year-long bond-buying stimulus program.

Unexpectedly strong third-quarter U.S. economic growth data on Thursday, coupled with the Fed policy statement which suggested the U.S. central bank could hike interest rates sooner than expected, lifted the dollar index. [FRX/]

Also weighing down on the precious metal complex was data showing weak price pressure in Germany and Spain. Muted inflation readings gave the European Central Bank some grounds to hold off more economic stimulus. [ID:nL5N0SP4BA]

Analysts said that expectations of a sooner-than-expected interest rate hike and a subsequent a dollar rally could further pressure gold prices.

A sales assistant arranges gold necklaces at a store in Lianyungang, 

"Our sense is that there are still obviously more adjustments still to come in terms of (higher)

real rates and the dollar, and we do feel that gold will be breaking those lows," said Michael Lewis, head of commodity research at Deutsche Bank.

Spot gold fell as low as $1,195.70 an ounce, which marked a three-week low. It was last down 1.2 percent to $1,197.40 an ounce by 11:25 p.m. (1525 GMT).

U.S. COMEX December gold futures were down $27.90 at $1,197.

U.S. interest rate futures shifted to show better-than-even chances of a rate rise next September. Previously, they had indicated a rise in October.

That dented interest in gold, which as a non-yielding asset tends to benefit from ultra-low rates.

The U.S. central bank largely dismissed financial market volatility, a slowdown in Europe and a weak inflation outlook as factors that might limit progress towards its unemployment and inflation goals. [ID:nL1N0SO24I]

Commerce Department data showed a smaller trade deficit and a surge in defense spending buoyed U.S. growth in the third quarter, though other details of Thursday's report hinted at some loss of momentum. [ID:nLNNULEA31]

Silver was down 4.1 percent at $16.35 an ounce, having earlier hit its lowest since March 2010 at $16.30.

COMEX options floor trader Jonathan Jossen said investors sold silver on heavy losses in copper and technical selling after it broke below key support near $16.80, near its recent low from earlier this month.

Spot platinum fell 1.5 percent to $1,235.25 an ounce, while spot palladium dropped 1.9 percent to $774.75 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore, Editing by William Hardy and David Clarke and Marguerita Choy)