Gold Prices Drift Lower

Longer term, some dollar watchers see the U.S. currency resuming its decline. Adam York, an economic analyst at Wachovia in Charlotte, says the bank is forecasting an end-of-year euro exchange rate of $1.38. Such a scenario would likely benefit gold bulls.

Back in the gold patch, the Market Vectors Gold Miners ETF(GDX Quote) was off 2.2%%. Gold Fields(GFI Quote) was off 4%, and Kinross Gold(KGC Quote) was lower by 4.6% in recent action.

Turning to base metals, copper continued Wednesday's slide with more fund selling and long liquidation. March-dated contracts declined 4.7 cents to close at $2.602 a pound on the Comex, as traders remained nervous after the prior session's plunge.

"Personally, I think the copper market is ripe for a short-covering rally," says William Adams, a metals analyst at BaseMetals.com. He sees evidence of consumers using the price dip to lock in forward contract prices, which should help provide some comfort to those with long positions.

Adams spies technical support at around $2.54 a pound and also foresees increased volatility for a while.

Shares of producer Southern Copper(PCU Quote) shed 1.1%, but others fared better. Freeport-McMoRan Copper & Gold(FCX Quote), tacked on 0.9%, while Phelps Dodge(PD Quote) was down only a whisker.