Gold for August delivery closed down $4.30 to $1,222.60 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,228.90 and as low as $1,215. The U.S. dollar index was slipping 0.15% to $86.75 while the euro dipped 0.23% to $1.22 vs. the dollar. The spot gold price Wednesday lost more than $1, according to Kitco's gold index.
Profit-takers weighed on the gold price as the metal was one of the few assets Tuesday to yield a positive return. Risk appetite also returned today after a two-day losing streak and investors opted for stocks rather than gold. The Dow Jones Industrial Average closed 2.25% higher while gold slipped after rallying $12 on Tuesday.
The tug-of-war between profit-takers and bargain-hunters promises to continue and keep gold prices in a narrow trading range. Gold is expected to retain its appeal as a safe-haven asset as spooked investors search for a protected place to put their money. Although gold doesn't offer a dividend or a yield, it is a form of money that retains its value.
According to China's Xinhua news outlet, Iran's central bank will sell euros for the U.S. dollar and gold. Iran joins a host of other emerging countries like China and India that have been ramping up their gold reserves and discarding paper currencies. Typically central banks increase their gold reserves as needed apart from cost and fundamentals but Iran's shift out of euros could be regarded as a criticism of the currency's sustainability. India currently has 6% of its reserves in gold while Asia only holds 2% as compared to the U.S. which has 74%. Gold prices will find direction from any news coming out of the eurozone countries as well as the U.S. nonfarm payroll report on Friday. The unemployment rate is expected to fall to 9.8% from 9.9% but a better-than-expected reading could improve risk appetite and prompt investors to rotate out of gold and into stocks. However, with selling pressuring running rampant, a disappointing number could result in a flight to safety and buoy gold prices. Gold is still trying to break its record high of $1,249 an ounce.