NEW YORK (
recovered from earlier losses Tuesday as the
Dow Jones Industrial Average
plunged triple digits on weak existing-home sales data.
Gold for December delivery closed $4.90 higher at $1,233.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Tuesday has traded as high as $1,237.50 and as low as $1,211.70. The
was slipping 0.05% to $83.08 while the euro was up 0.15% to $1.26 vs. the dollar. The spot gold price Tuesday was adding $4, according to Kitco's gold index.
Gold prices had been coming under significant selling pressure early Tuesday as
to raise cash, but the news that existing-home sales fell more than 27% in July spooked investors into bargain-hunting for gold.
The weak data underscored the fragility of the U.S. economy and highlighted fears that the housing market can't recover without a government tax credit. Despite gold's recovery on Tuesday, the metal is still in for a volatile week as thin volumes and investor interest in cash is likely to keep prices in a tight range. Most analysts expect any price weakness in gold to be short-lived.
"Gold's selloff suggests general nervousness and long liquidation," says William Adams, analyst at
in his daily base and precious metals report. "We would however expect dips in gold to run into good buying."
With more potentially disappointing economic data to come this week, gold could enjoy another safe-haven rally. On Thursday the Department of Labor is slated to release initial jobless claims for the week ending Aug. 21, while the Department of Commerce's second reading on U.S. gross domestic product is due on Friday. The first reading found the U.S. GDP was up 2.4% in the second quarter, but the latest poll of economists by
brought in revision estimates for growth of as low as 1.3%.
The general consensus among many analysts is that gold should be trading higher right now on a variety of factors from general market jitters to the news that Iran has a working nuclear reactor.
Phil Streible, senior market strategist at Lind-Waldock, blames low volume for the lackluster interest in the gold market and warns "if investors are long right now and bullish on gold, I urge some caution because
when volume does come in, gold prices might set back a little bit and come back down to the $1,200 area."
A substantial dip in gold prices offers an attractive buying level for investors looking to add to their positions at "cheaper" levels. Gold still needs to overcome the $1,250 resistance level before advancing much higher.
rallied 38 cents to $18.37, while copper settled down 5 cents at $3.24.
, a risky but potentially profitable way to
, were trading down with broader equities.
was down 0.21% to $4.85 while
Freeport McMoRan Copper & Gold
fell 4.63% to $67.10. Other gold stocks
were trading at $5.52 and $13.86, respectively.
Written by Alix Steel in New York.
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