NEW YORK (
lost steam Thursday as investors sold the metal to raise cash with stocks driven lower by a weak manufacturing report in the Kansas City region.
Gold for December delivery settled down $3.60 to $1,237.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Thursday has traded as high as $1,246 and as low as $1,237.20. The
was slipping 0.46% to $82.80, while the euro was slightly higher at $1.27 vs. the dollar. The spot gold price Thursday was falling more than $2, according to Kitco's gold index.
Gold prices rallied ahead of the initial jobless claims report early this morning as investors braced for the worst. But claims fell to 473,000; not a great number but better than the previous week's 500,000.
But the mood turned sour in midday trading after the Federal Reserve Bank of Kansas City said manufacturing activity slowed in the region this month. Stocks slipped into the red -- the Dow Jones Industrial Average closed below 10,000 for the first time since early July -- and gold prices fell as investors sold gold to cover equity losses.
Gold prices are expected to stay confined to a broad trading range in the short-term, despite a strong close above the $1,240 level on Wednesday. Thinning volume and portfolio re-balancing are forcing prices to wait for after Labor Day when traders come back in full force and China and India kick of their festival and wedding season, traditionally a strong buying period.
"I wouldn't be surprised if the volatility in the stock market spills over into the precious metals market," Pratik Sharma, managing director at Atyant Capital.
Gold is a safe haven for investors but as they lose money in stocks they must sell gold positions to raise cash to meet margin calls. On the flip side, any bad news can prompt a flight to safety into the metal and recent dips have been met with bargain-hunting.
Video: Dow 10,000 Means Volatility for Gold Prices >>
"Right now you're definitely seeing resistance at the $1,245 level,' says Sharma. "Taking out $1,245 on the upside would set gold up to take out its all-time high
of $1,264 an ounce ... you see strong support
at and around $1,200."
Gold prices will also be on hold heading into Friday when the Department of Commerce delivers its second estimate on second-quarter gross domestic product and
kicks off a two-day meeting of world central bank leaders in Wyoming. Analysts will be looking for any hints of further monetary easing by the Fed and other countries, which could trigger a flow into gold as investors react to paper currencies losing value.
settled down 4 cents at $18.98 while copper closed up 9 cents to $3.30.
, a risky but potentially profitable way to
, were higher.
Freeport McMoRan Copper & Gold
was up 1.17% to $67.44 while
added 1.38% to $5.15. Other gold stocks
were trading at $6.04 and $14.30, respectively.
Written by Alix Steel in New York.
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