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Gold Prices Close Lower on Profit-Taking

Stocks in this article: GRS CGC SGOL IAU FCX AUY NGD GFI

NEW YORK ( TheStreet ) -- Gold prices settled lower Monday with market action driven by a stronger U.S. dollar and profit-taking.

Gold for December delivery closed down $1 to $1,316.80 an ounce at the Comex division of the New York Mercantile Exchange, on light volume. The gold price traded as high as $1,321.30 and as low as $1,313.40 during Monday's session.

The U.S. dollar index was rallying 0.45% to $78.44 while the euro was falling 0.83% to $1.36 vs. the dollar. The spot gold price was slipping $3.90, according to Kitco's gold index.

Gold prices lost steam Monday as another record high settle on Friday of $1,317.80 an ounce triggered light profit-taking. Gold's upside was also tempered by a stronger U.S. dollar which gained against the euro on a State Department travel alert warning of a possible terrorist attack in Europe.

"The metals may look to consolidation," says James Moore, analyst at thebulliondesk.com in his daily metals report, "but we expect strong dip-buying interest from the physical and investment to underpin the market and continued diversification to ultimately drive the metals to fresh highs."

Gold, along with the broader market, is also in wait-and-see mode until Friday's U.S. unemployment report as well as Alcoa's (AA) third-quarter earnings report Thursday, which unofficially kicks off earnings season. The gold price rallied 4.8% in September, pricing in a move by the Federal Reserve to print more money to lend to the government. The Fed action is expected to be announced at the Fed's next meeting on Nov. 2-3.

The jobs report on Friday could be a mixed bag for gold and the Fed. The unemployment rate is expected to rise to 9.7% but the private sector is expected to add 60,000 jobs, according to Briefing.com. If the number disappoints or is in line, analysts expect the green light for monetary easing. If the number surprises to the upside, analysts worry the Fed might not announce as large a bond purchase program which would hurt those traders building gold positions as a hedge against future inflation.

Scott Redler, chief strategic officer for T3Live.com, says gold prices can probably surge to $1,400 an ounce by the end of the year but "this is probably a spot ... to lighten up a little bit." Most analysts expect more volatility in the days ahead.

Gold is also looking to other world central bank meetings this week particularly out of Japan. The Bank of Japan's two-day policy meeting is expected to result in more monetary easing as Japan decreases the value of the yen in order to help exports and its struggling economy.

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