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Gold Prices Fall on Greek Debt Drama

NEW YORK ( TheStreet ) -- Gold prices tracked the euro lower Wednesday as the market was jittery waiting for a Greece debt deal.

Gold for April delivery closed down $17.10 at $1,731.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,754.80 and as low as $1,729.10 an ounce while the spot price was shedding $14.80, according to Kitco's gold index.

Silver prices closed 49 cents lower at $33.70 an ounce while the U.S. dollar index was slightly higher at $78.58.

Gold investors were jittery with Greece still trying to secure its second bailout. Initially, gold and the euro were firmer as the feeling was a deal was imminent but then the euro and gold reversed directions on a Bloomberg report that the European Central Bank wouldn't help Greece reduce its debt load. The Greek government is still trying to push austerity measures through Parliament as well as negotiate a bond swap with private investors and the European Central Bank, which would leave the investors at a loss.

However, "the near-term outlook for gold looks positive," says James Steel, analyst at HSBC. Indeed, tonnage in the SPDR Gold Shares (GLD) remained constant at $1,277 tons, despite gold's two day 2% decline. Gold is also finding some support as Federal Reserve chairman, Ben Bernanke, reaffirmed his commitment, to what many interpret, as a weak dollar policy by keeping rates low until the end of 2014 despite improving economic data.

Bespoke put out a note Wednesday saying that the U.S. dollar index was in danger of breaking below key technical levels "and is in danger of breaking its six month uptrend." A substantial dollar pullback could add support to gold as the two mostly move inversely to each other.

David Banister, chief investment strategist at, thinks that gold is entering the last and final stage of its bull market. "I believe that it is a 13 year cycle and we are in the fifth and final wave pattern up," he says, which could last for 12-18 months.

The moderating of physical demand from China and India he says is also an indication of the end of the bull market. China imported only 38 tons of gold in December down 62% from November and slowing growth there would further effect jewelry consumption.
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