This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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 Cling to Gains on Weaker Dollar

Stocks in this article: GOLD AUY KGC EGO

NEW YORK ( TheStreet ) -- Gold prices clawed higher Tuesday as the U.S. dollar fell on hopes that Europe will make progress on stemming its debt crisis.

Gold for February delivery added $4.40 to close at $1,718.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,721.70 and as low as $1,702.70 an ounce while the spot price was up $9, according to Kitco's gold index.

Silver prices lost 29 cents to close at $31.95 an ounce while the U.S. dollar index was down 0.23% at $78.99.

Gold prices held after a monster rally Monday that pushed prices up 1.5%. Helping gold today was also a stronger U.S. stock market, leaving less need for investors to dump gold for cash.



The euro, and consequently gold, shook off a mixed Italian debt auction. The country was able to raise the money it needed but had to pay up to do so, with the 10 year yield soaring to 7.65% versus 6% a month ago. Investors were also eying a eurozone finance ministers meeting today that will address beefing up the firepower of the region's bailout fund, as well as Greece's next 8 billion euro chunk of bailout money needed in early December.

Federal Reserve Vice-Chairman Janet Yellen, who is a voting member, opened the door for more quantitative easing, saying in prepared remarks that the "scope remains" to either tie interest rates to benchmarks providing more clarity to the market or by buying more assets.

"Further pockets of bargain hunting and safe-haven related buying will help support the gold in the coming sessions," says James Moore, research analyst at FastMarkets.com, "but as a whole we expect the recent trend of mixed volatile trade to continue with the metals vulnerable to further bouts of cash generating related long liquidation."

Indeed the latest commitment of traders report for the week ending November 22nd was mixed. On the one hand, total long positions fell by almost 13,000 contracts which showed profit taking and the need for cash, while total short positions decreased by 26,000 contracts which means a portion of gold's recent rally can be attributed to short covering.

Phil Streible, senior market strategist at R.J. O'Brien, says short covering could also be continuing. "$1,700 was a key level of resistance and we blew through that and that is where short covering intensified." Traders in essence borrow shares and sell them at one price, hope the price goes lower then buy back those shares, return them to the broker and pocket the difference. When the price rallies instead, traders then must scramble to buy back those shares at the lowest price they can find in order to protect profits, which often adds to buying pressure.

"If we can get a two day close over $1,720 or we can take out $1,750, it's going to start a new technical buy pattern," says Streible meaning that the recent rally won't just have been short covering, "as long as prices can hold these levels we will probably continue higher."

Other gold mining stocks were mixed Tuesday. Kinross Gold (KGC) was down 0.31% to $13.02 while Randgold Resources (GOLD) was jumping more than 8%, reversing its losses from Monday on an upgrade to buy from Investec Securities. Other gold stocks, Eldorado Gold (EGO) and Yamana Gold (AUY) were trading at $16.88 and $15.68, respectively.

-- Written by Alix Steel in New York.



>To contact the writer of this article, click here: Alix Steel.

Related Articles:


Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
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!

Markets

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 Bankrate.com

  • 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