NEW YORK (
plummeted Thursday as investors sold gold for cash and stocks.
Gold for August delivery settled down $12.60 to $1,210 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Thursday has traded as high as $1,226.50 and as low as $1,202.40. The
was rising 0.46% to $87.12 while the euro lost 0.71% to $1.21 vs. the dollar. The spot gold price Thursday was losing $17, according to Kitco's gold index.
Gold prices sold off significantly mid-day as conflicting economic data in the U.S. confused investors. First risk appetite returned and prompted investors to buy stocks vs. safer gold. After the
Dow Jones Industrial Average lost 8% in May
, many traders took the decline in stocks as a bargain-hunting opportunity and used profits from gold, which popped almost 2% in the same month, to fund their hunt. Stocks were jumpy in late-day trading and triggered a gold sell-off as investors rotated into cash and U.S. dollar. A dollar rally makes dollar-backed commodities more expensive to buy in other currencies.
$2,400 Gold Prices
Metals, in general, were suffering as worries spread that weakening demand from Europe and China would lead to an abundant supply and lower prices. Also speeding up gold's sell-off is momentum selling as many traders have stop-loss orders where they have to sell if gold sinks to a cetain level.
Despite any sentiment shift, investors are still hedging their bets with gold. The popular gold exchange-traded fund,
SPDR Gold Shares
, added 0.60 tons this week. Although the number is considerably less than the 31 tons the ETF added last week, tonnage is still up almost 10% for May which highlights the fact that investors want continued exposure to gold as a safety net. Shares of the gold ETF were down 1.35% to $118.16. Gold prices could see a short-term correction, but dip buyers are expected to provide support for higher prices for the medium-term especially as prices head towards $1,200 an ounce.
Gold has been confined to
a narrow range," says James Moore, analyst at
. "But ... buying continues to been seen as investors look to diversify inflation and debt concerns ... Chart support for the moment is seen at $1212/1201 in gold ...while upside resistance is pegged at $1230/42/49.50."
settled 38 cents lower to $17.93 while copper closed down 9 cents to $2.94.
Gold mining stocks, a more risky and more profitable way to
, were lower.
was losing more than 2% to $42.11 while
was slipping almost 3% to $54.12. Other large gold miners
were trading at $42.34 and $42.91, respectively.
Freeport McMoran Copper & Gold
were falling almost 5% to $65.59 while
was lower by 4.14% to $86.82.
Written by Alix Steel in New York
Alix joined TheStreet.com TV in February 2007. Previously, she held positions in film and theater production, management, and legal administration. Alix has a degree in communications and theater from Northwestern University.