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Gold Prices Settle Lower

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Gold prices settled lower in trading on Thursday as U.S. inflation data prompted investors to take profit on the precious metal following a three-day rally. Gold broke ranks with the euro on Thursday.

Gold was among the few losers in the commodities complex. The precious metal slipped after a report from the Labor Department showed that consumer prices in U.S. were flat in the month of December. Core consumer prices rose 0.1% in December.


Gold prices have risen nearly 6% this year even though the euro is in negative territory. This is in contrast to the last two months of 2011 when gold tracked the single currency.

James Steel, Chief Commodity Analyst at HSBC, told Reuters that gold rally begin to stall temporarily but not reverse. Steel said that without a higher euro, there is no compelling near-term reason for higher gold prices. Steel added that he remained bullish on gold in the medium-to-long term.

Ole Hansen, Senior Manager at Saxo Bank, told Reuters that the euro rally could be running out of steam ahead of $1.30. Hansen also said that gold’s rally does not appear overdone but it must confirm support on charts before embarking on another leg up.

Pradeep Unni, Senior Analyst at Richcomm Global Services, told Reuters that rising risk appetite, a weak U.S. dollar and the breach of key resistance is giving gold the momentum to head towards the $1,700 an ounce level in the near term. Unni said that further resistance could be expected at $1,686 an ounce.

Spot gold dropped 0.5% to $1,651.79 an ounce. Earlier in the day, spot gold had risen to $1,669.75 an ounce, its highest level since December 13. Gold rose early on Thursday after Spain and France successfully completed their bond auctions, easing some worries about the euro zone debt crisis.

The precious metal was also lifted by Wednesday’s report that the International Monetary Fund (IMF) is looking to boost its lending capacity. In a research note, Standard Bank today said that despite the U.S. and U.K. saying that they would not commit to such a move, the market took heart that this would help ease the fiscal problems facing the euro zone. Standard Bank further said that the renewed confidence has seen markets adopt a cautious risk-on stance, pulling the dollar down and consequently easing downward pressure on precious metals and commodities in general.

Gold failed to hold on to its gains following the release of U.S. inflation data. Gold futures for delivery in February on the Comex division of the New York Mercantile Exchange settled $5.40 lower at $1,654.50 an ounce.

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.24% lower at $161.22, the Market Vectors ETF Trust (NYSE: GDX) ended the day 2.05% lower at $52.15, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 0.25% lower at $16.16.

Silver prices also fell in Thursday’s trading session. At last check, spot silver was down 0.1% to $30.46 an ounce. Silver fell despite news that Sprott Physical Silver Trust’s holdings jumped 41% after the ETF raised more than $300 million used to acquire physical silver to back its shares.

According to analysts, Sprott’s move was not enough to boost silver prices as there was sufficient supply for industrial end-users amid fears of an economic slowdown.

The iShares Silver Trust (ETF) (NYSE: SLV) ended the day 0.30% higher at $29.74, the ProShares Ultra Silver (ETF) (NYSE: AGQ) ended the day 0.64% higher at $50.52, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) ended the day 0.85% lower at $12.76.

In other precious metals, spot platinum rose 0.2% to $1,514.74 an ounce, while spot palladium rose $674 an ounce.

 

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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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