Gold Prices Settle Near Session Highs

NEW YORK (TheStreet ) -- Gold prices were resilient Wednesday and closed near session highs despite some earlier profit- taking.

Gold for December delivery settled $3.10 higher to $1,231.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,234.40 and as low as $1,218.90 on light volume. The U.S. dollar index was flat at $82.23 while the euro was slipping tentatively to $1.28 vs. the dollar. The spot gold price Wednesday was up $4, according to Kitco's gold index.

Investors flirted with profit-taking and bargain-hunting Wednesday, but the majority of them held the metal as a safety net against volatile stocks. Gold prices had sold off earlier in the trading session but the dip was met with steady buying, which pushed prices past the $1,230 resistance level. This dedication to gold could set the stage for a rally in the fall.

Gold prices historically can rise as much as 2.5% in September, which would push prices towards their intraday high of $1,264 an ounce. The summer months are typically a slow buying period and investors look to September to provide support for prices as Chinese and Indian consumers ramp up their purchases of gold jewelry during wedding and festival seasons.

Other analysts are not so bullish. Some expect a deeper correction in prices in the coming months.

"I think over the last couple of weeks the U.S. dollar has put in a major bottom," says Pratik Sharma, managing director at Atyant Capital. "As long as you see continued U.S. dollar strength I think gold will remain in a corrective/consolidated phase."

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Sharma is expecting gold prices to trade in a broad range of $1,160 to $1,250 an ounce and is skeptical as to "how much juice is left in this rally."

Over the long term, consistent downbeat economic data and cautious outlooks from companies could curb risk appetite and prompt another flight to safety into gold.

Gold prices have rallied 2% in the past week as investors fled into the metal as protection. The popular gold exchange-traded fund, SPDR Gold Shares(GLD), added almost 8 tons Tuesday. Shares were trading slightly higher at $120.24.

"The fundamentals continue to bolster gold," argues David Morgan, founder of Silver-Investor.com. "I mean just some of the headlines over the last couple of days ... but volume is low and [gold] looks to be on a short-term basis overbought."

Silver prices closed 19 cents lower at $18.39 while copper settled up 1 cent at $3.34.