Gold Suffers Minor Slip

Ahead of the midterm election and economic news, dollar strength weighs on the metal.
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Gold edged a touch lower Monday as the dollar moved modestly higher.

With a dearth of data and with currency traders seemingly unwilling to commit ahead of

Tuesday's midterm elections, the U.S. dollar etched out a small gain, recently buying 118.341 yen, up from 118.01 late Friday. The dollar was barely changed but slightly higher against the euro, which was trading at $1.2714 compared with $1.2717 at the end of last week.

Bullion, which often declines when the U.S. dollar is strong, was dipping slightly, with prices for December contracts off $1.90 at $627.30 an ounce on the Comex division of the Nymex. The gold exchange-traded funds followed suit, with

streetTracks Gold Shares

(GLD) - Get Report

and

iShares Comex Gold Trust

(IAU) - Get Report

both moving down about 0.3% recently.

Apart from the election, this week investors will be awaiting U.S. trade balance data and wholesale inventory levels, which are due to be released Thursday and which could have an impact on the greenback. In the meantime, gold market observers say that the price of bullion may need to take a breather after its run-up over the past few weeks. Spot prices have advanced about $55 an ounce since Oct. 6, according to data from the London Bullion Market Association.

"A period of consolidation would be healthy, however, I think gold has the legs to reach the $645 area before running into overbought territory," notes James Moore, an analyst at

TheBullionDesk.com

in London.

Others say that higher prices can be sustained only if solid and steady demand can be maintained.

"We have to see evidence of retail investors buying in order for long-term support to be developed," says Jon Nadler, an analyst at Montreal bullion dealer Kitco. "Only then could you have real equilibrium."

Nadler adds that private investors are now more relatively important that central banks.

Among the majors, Matrix Research downgraded

Newmont Mining

(NEM) - Get Report

, while BMO Capital Markets dinged stock of

Barrick Gold

(ABX)

down to a market-perform rating from market outperform. Shares of the two companies were trading lower by 0.2% and 1.7% respectively, with the softer bullion price having an impact as well as the rating change.

Elsewhere, shares of

Freeport-McMoRan Copper & Gold

(FCX) - Get Report

were also moving down 0.3%.

In M&A news,

Kinross Gold

(KGC) - Get Report

agreed to acquire rival Canadian gold miner

Bema

(BGO)

for $2.81 billion in stock. Toronto-based Kinross will issue 0.441 share for each share of Vancouver-based Bema in a deal that gives Bema holders a 22% premium to Friday's closing prices.

Kinross shares were recently down 9.65% to $11.98, while Bema was up 8.8% at $5.20.

Comex December contracts for silver were moving higher by 6.5 cents at $12.70 an ounce, while in base metals, copper contracts for the same data were losing 0.25 cents at $3.32 a pound.