Gold Prices Settle Lower

Gold prices closed down double digits Thursday as investors continued to prefer stocks to gold.
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Gold prices

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

U.S. dollar index

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

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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

(GLD) - Get Report

, 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."

Silver prices

settled 38 cents lower to $17.93 while copper closed down 9 cents to $2.94.

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Gold mining stocks, a more risky and more profitable way to

invest in gold

, were lower.

Barrick Gold


was losing more than 2% to $42.11 while

Newmont Mining

(NEM) - Get Report

was slipping almost 3% to $54.12. Other large gold miners

AngloGold Ashanti

(AU) - Get Report




were trading at $42.34 and $42.91, respectively.

Shares of

Freeport McMoran Copper & Gold

(FCX) - Get Report

were falling almost 5% to $65.59 while

Randgold Resources

(GOLD) - Get Report

was lower by 4.14% to $86.82.


Written by Alix Steel in New York


Alix joined 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.