This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Gold Prices Lose Steam as Equities Regain Momentum

Stocks in this article: AUY KGC AEM EGO

NEW YORK ( TheStreet ) -- Gold prices closed lower Friday after a roller coaster day as stocks see-sawed despite a better-than-expected read on the labor market for July.

Gold for December close down $7.20 to $1,651.80, an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,673 and as low as $1,644.20 while the spot gold price was adding $4.50, according to Kitco's gold index.

Silver prices were down $1.20 to settle at $38.21 an ounce. The U.S. dollar index was down 0.96% at $74.58 while the euro was adding 1.11% vs. the dollar.

Gold prices had a wild and crazy day Friday after being caught in a flood of selling Thursday as investors fled all assets. Gold then mounted a solid rally Friday as investors searched for a safe haven after July's jobs report only to lose steam into the close.

On the surface the jobs news was good, which caused gold to give up some early morning gains, but the number wasn't enough to buoy investor sentiment for long. The U.S. economy added 117,000 jobs, 154,000 private sector jobs and the unemployment rate fell to 9.1%.

Although better than expected, there are still 14 million unemployed people in the U.S. and other data points to slowing growth, like weaker manufacturing figures and lousy GDP numbers.

As a result, talk of recession has emerged once again. Plummeting stocks aren't enough to signal a recession but lower stocks, lower growth, lower manufacturing activity and higher unemployment "add to existing concerns," according to a report from Sam Stovall, Standard & Poor's chief investment strategist.

These worries go a long way to higher gold prices. After June's dismal jobs report, gold prices rose $14 on the spot market. That theory didn't pan out Friday, however, as gold sold off on news that Italy would implement austerity measures sooner than expected and speed up fiscal consolidation to balance the budget by 2013, igniting a late-day rally in stocks.

The European Central Bank might now buy Italian and Spanish bonds, desperately needed as the countries' borrowing costs are soaring, as the governments seriously tackle debt issues. The Italian Prime Minister has been in contact with his counterparts from Spain, Germany and France including Angela Merkel and Nicholas Sarkozy. Investors were cheered by EU's ability to tackle debt issues and dumped gold for stocks.

"I think the whole world was looking at the $1,680 level ," says Dave Kavanagh, CEO of Grant Park Fund, who thinks gold could sell off further in the short term.

Kavanagh said if the dollar rallies, then gold could sell off as much as 10% from its intraday record, which would take gold to about $1,484 an ounce. "Does that mean the run in gold is over? Absolutely not," he said. The dollar could rally on short-covering and technical trading, according to Kavanagh, but that long-term it's not any better than other fiat currencies, which leaves gold as the only real form of money.

"I still think there is substantial percentage upside in gold ... I think there is nowhere else to put money right now," argues Kavanagh.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs