Gold Finds Buyers but Ride Still Bumpy
Source: The Street, Alix Steel (1/24/11)
"Future battle of profit-takers, bargain-hunters to keep gold's range tight."
Gold for February delivery was adding $5.30 to $1,346.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded has high $1,352.40 and as low as $1,340.70 while the spot gold price scooted $4.60 higher, according to Kitco's gold index.
The U.S. dollar index was down 0.41% to $77.89 while the euro was up 0.40% to $1.36 vs. the dollar.
Silver didn't fare as well as the silver ETF—iShares Silver Trust—dropped 180 tons on Friday. This kind of schizophrenia in the precious metal trade won't die out anytime soon as traders battle with a risk on/risk off mentality.
"The build in SPDR holdings Friday again indicates the scale of pent-up demand below the market due to ongoing concerns over debt-default in the eurozone and rising inflation fears," argues James Moore, research analyst at fastmarkets.com.
The uptrend for gold and silver will largely depend on investor dip-buying. Investors are unlikely to commit a huge amount of new money to gold and silver if they think there could be another selloff or if they feel better about a global recovery. But big double-digit declines will entice some traders to buy up the metal.
Even if gold does bounce, which it is doing Monday, prices could still retrace and come back towards the $1,330 level, Morgan says.