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 Struggle as the Dollar Gains Appeal

Stocks in this article: AEM EGO GOLD KGC

NEW YORK ( TheStreet ) -- Gold prices closed lower Tuesday after waffling for most of the session as investors moved toward the safety of the dollar and left gold on the sidelines.

Gold for April delivery closed down $7.20 at $1,717.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,729.90 and as low as $1,713.80 an ounce while the spot price was shedding $6, according to Kitco's gold index.

Silver prices lost 37 cents to close at $33.34 an ounce while the U.S. dollar index was up 0.57% at $79.57.

Gold prices drifted lower on a credit downgrade from Moody's of six eurozone countries and the placement of France and the U.K. on credit watch negative. Gold came under some pressure after the downgrades bolstered the U.S. dollar's position as the currency of choice, but its selloff was somewhat limited as investors "bought the dip," and as Germany's economic sentiment index came in much higher than expected. Investors further dumped stocks for the dollar after January retail sales in the U.S. came in weaker than expected.



Gold "still looks range bound from $1,700 to $1,750," says George Gero, senior vice president at RBC Capital Markets, "as open interest is not building and the small margin decrease has not helped." The CME lowered the amount it costs to buy a gold futures contract on Friday by 12%, which is typically done to spur demand.

"A fall in price is unlikely," argues Commerzbank, "since it would appear that there is brisk interest in buying gold at around the $1,700 a troy ounce level."

Gold prices in yen were also up Tuesday after the Bank of Japan increased its asset purchase program, or QE, by 10 trillion yen. Many experts were surprised by the move and had expected the central bank to wait for further easing signals from the Federal Reserve, which would have devalued the dollar and boosted the yen. The yen has been a safe haven as interest rates are high in the country and as investors seek returns. The strong currency has been a drag on the country's growth and has hampered its ability to fight deflation.

Gold tends to find support when central banks try to pump more money into the system as the metal moves higher on inflation expectations and perceived weakness in paper currencies.

Another possible catalyst for gold this week might be a slew of economic data out of the U.S., which had been slated to be strong but today's retail sales number put a damper on that expectation. Better news might trigger a flight out of the U.S. dollar and into "riskier assets," while disappointing news would have the opposite effect. Gold will be at the mercy of those price fluctuations.

1 of 2

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