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Updated from 3:17 p.m. with with final spot price and closing prices of various gold stocks
NEW YORK (
TheStreet) -- Gold prices rose Wednesday as the yellow metal's safe-haven appeal continued to grow ahead of the upcoming general elections in Greece this weekend.
Gold for August delivery settled up $5.60 at $1,619.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,626 and as low as $1,607 an ounce during the session, while the spot price closed up $7.80, according to
"Spain has been dominating the news, the fact that Spanish officials have asked for a larger number I think signifies they realize that there's a lot at stake," said James Moore, an analyst at FastMarkets.com. "You've also got, obviously, the Greek elections going on in the background."
Silver prices were down less than one cent at $28.94 an ounce while the U.S. dollar index was 0.17% lower at $82.24.
Moore said he feels gold prices are unlikely to clear $1,640 until after the Greek elections, projecting a range of $1,570 to $1,640 ahead of the weekend.
Jeffrey Wright, managing director of metals and mining at Global Hunter Securities, said the continued deterioration of the euro could weaken the correlation of the currency and the U.S. dollar to gold.
"As the euro continues to weaken -- I think it will -- you're going to see not the same impact to gold prices as we've seen in 2011 and 2012, so far," Wright said. "That correlation will diminish over time, and the relationship that is probably a little more important moving forward is the relationship of the U.S., Canada, Australia and China in relation to gold."
Another factor is next week's
Federal Reserve policy meeting. Market expectations have increased that the central bank may signal its willingness to embark on another round of quantitative easing or possibly even announce a short-term extension of Operation Twist, its current bond-buying program, which expires this month.
The recent softening in U.S. economic data -- especially the weak May jobs report -- has fed into this argument. On Wednesday, the Commerce Department said retail sales fell by 0.2% in May. Excluding autos, sales fell 0.4%. More quantitative easing is generally seen as a positive for gold prices.
"Gold is sort of being a little diffident here, waiting for some sort of action in Europe and then also some resolution on this fiscal cliff issue," said Sonny Tahiliani, managing director of precious metals at MacroMoves Capital Advisors. "I wouldn't expect gold to do anything dramatic either way until we see some movement on either of these."