Gold for February delivery settled up $1.50 to $1,385.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded in a relatively tight range however, running as high as $1,387 and as low as $1,376.30 during Wednesday's session.
The U.S. dollar index was down 0.85% at $80.13 while the euro was adding 1.19% to $1.31 vs. the dollar. The spot gold price was adding $5.90, according to Kitco's gold index.
Anxious investors had piled into gold on Tuesday as protection against sovereign debt fears in Europe. On the top of the list was the worry that Portugal wouldn't raise enough money Wednesday or would have to do so at high rates.Neither of those scenarios really panned out and gold floated listlessly all day. The country borrowed €1.2 billion over four and 10 years. Portugal's short-term borrowing costs rose to 5.39% but its longer-term costs, helped by European Central Bank bond buying, dropped to 6.71%. The sale helped ease the pressure on Portugal to take bailout money from the International Monetary Fund and European Union. Although the situation is far from optimistic, it is no longer dire. The euro got a boost which weighed on the dollar and helped gold. Gold staged a rally Tuesday closing up double digits, the first time the metal breathed a sigh of relief in the new year. The rise might have prompted some traders to take profits earlier in Wednesday's trading. "Momentum driven traders in the gold pits could push gold lower,' says Mark O'Byrne, executive director of Goldcore, an international bullion dealer, broker and wealth manager. The gold spot price is holding up better than the gold price in the futures market which indicates more physical buying. O'Byrne says what will hold up the price is strong physical demand from Asia as consumers buy gold below $1,400 in U.S. dollar terms. "There are increasing reports of shortages of gold bars and premiums have risen to two-year highs. This is leading to consolidation close to record nominal highs in all fiat currencies," he says.