was rising 0.3%, while gold was declining $3.70 to $1,094.40 an ounce at the Comex division of the New York Mercantile Exchange.
Investors appeared to be placing bets on a rise in interest rates next year, and on speculation that the federal government is preparing to wind back some of its economic stimuli.
Still, the recent selloff in gold and other commodities "hasn't done any technical damage," said Darin Newsom, senior commodities analyst at Telvent DTN. Thin trading volumes and shrinking open interest have increased volatility in commodities prices of late, but the rally of middle December has provided enough support to those prices that, Newsom said, the market was able to avoid what could have been a "bearish turn."
Still, if the dollar continues to strengthen in the new year, a key gold-price support level of $1,030 an ounce will once again come into play, Newsom said. If the yellow metal breaks below that, "then things get dicey."
Gold delivery for February, the most actively traded contract, has traded as high as $1,098.70 an ounce and as low as $1,086.60 on Wednesday.
were dropping by about 23 cents to $16.89 an ounce, while copper was falling by about two pennies to $3.33.
Investors have been making bets on a rise in the dollar based on the belief that the
will have to lift interest rates at some point in 2010 as a recovering economy sparks inflation fears. Higher interest rates would dampen inflation, making gold, a classic inflation hedge, less attractive to investors. Historically low interest rates, meanwhile, have made the prospect of holding cash, as opposed to commodities and equities, less appealing.
Mining stocks, a more leveraged way to
, were mostly lower Wednesday.
were down about 0.2% apiece.
, meanwhile, was among the few gold-mining names in the green Wednesday, gaining 0.3% to $40.80.
The popular physically backed ETF,
SPDR Gold Shares
was slipping 14 cents to $107.33.
Market Vectors Gold Miners
were trading at $46.04, down 0.8%, while
Market Vectors Juniors
were at $25.56, down 1.5%.
-- Written by Scott Eden in New York
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.