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Gold Prices Slip in Light Trading

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Gold prices slipped in Tuesday’s trading session as investors remained cautious in the final week of the year. Trading activity was light on Tuesday, with lack of fresh economic and corporate data in the U.S. and Europe. However, gold prices came under pressure from technical weakness and options selling.

Investors also remained on the sidelines on Tuesday as they assessed some mixed economic data. A report released by the Conference Board showed that U.S. consumer confidence rose more than forecast in the month of December. Meanwhile, the S&P/Case Shiller Index of home prices in 20 U.S. cities fell more than forecast.


Gold prices are headed for a 9% decline this month. Earlier this month, the precious metal fell below a key technical level, which it had held for almost three years. This fueled worries that gold’s Bull Run may be coming to an end.

Carols Perez-Santalla, Precious Metals Broker at PVM Futures, told Reuters that technically, a close above the 200-day moving average at $1,628 in spot gold is still needed to reinstate a bull market. Perez-Santalla also said that the gold market will see odd movements this week as many money managers have closed out the year, leaving the market with technical and headline-sensitive traders.

On Tuesday, spot gold fell to $1,588.89 an ounce, a one-week low. At last check, spot gold was down 0.8% to $1,592.80 an ounce.

Gold also came under pressure from option selling as some traders sold in-the-money options ahead of the expiry of Comex January gold options at Tuesday’s market close, according to George Gero, Vice President of RBC Capital Markets.

Gold futures for delivery in February fell $10.50 to settle at $1,595.50 an ounce on the Comex division of the New York Mercantile Exchange.

Adam Sarhan, CEO of Sarhan Capital, told Reuters that gold’s trading below its long-term rising trendline on weekly charts suggests that bears remain in control and that the precious metal will have to either rise above its 200-day moving average or its key upward trendline, which has now become a resistance, before another substantial rally.

Gold prices also came under pressure following reports that Chinese authorities would ban gold exchanges in the country outside the two in Shanghai. China is one of the top consumers of physical gold in the world.

India, which is the largest consumer of physical gold, saw its imports of gold fall nearly 75% from last year in November, according to estimates from the Bombay Bullion Association. Imports could drop as much as 50% in December, the industry group said.

Gold ETFs also ended lower on Tuesday. The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.90% lower at $154.91, the Market Vectors ETF Trust (NYSE: GDX) ended the day 1.69% lower at $51.90, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 0.89% lower at $15.53.

Spot silver also fell on Tuesday. At last check, spot silver was down 1.2% to $28.69 an ounce.

The iShares Silver Trust (ETF) (NYSE: SLV) ended the day 1.45% lower at $27.87, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) ended the day 2.96% lower at $45.32.

The iShares Silver Trust, which is the world’s biggest silver-backed exchange traded fund, saw a 1% decline in its holdings on the day to 9,605.79 tons by December 23.

The ProShares UltraShort Silver (ETF) (NYSE: ZSL), which takes a short position on silver, climbed 2.67% to $15.40 on Tuesday.

In other precious metals, platinum gained 0.4% to $1,430.24 an ounce on Tuesday, while palladium gained 0.5% to $660.99 an ounce on Tuesday.

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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