NEW YORK ( TheStreet) -- Gold prices sank Thursday as profit-taking and momentum selling eroded the yellow metal's appeal as a safe-haven asset. Gold for February delivery lost $15.20 to $1,371 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Thursday has traded as high as $1,387.30 and as low as $1,361.60. The U.S. dollar index was down 0.05% to $80.18 while the euro was slightly lower to $1.32 vs. the dollar. The spot gold price was up $12.50, according to Kitco's gold index. Investor enthusiasm might have peaked for the year as traders dumped gold before the Christmas and New Year's holiday. This leaves gold vulnerable to volatility and tight trading ranges as prices are subject to short-term trades and book-squaring. A key support level for gold is $1,370 which was broken as investors took profits. The $1,370 was a key level and probably activated some sell-stops in which traders must sell some positions to lock in gains. However gold managed to bounce off its intra-day low to settle over $1,370. Gold could see some "bargain" hunters emerge tomorrow as they look to buy gold on a dip. James Moore, research analyst for fastmarkets.com, is more optimistic and says that "gold and silver are likely to find further support from investor diversification" despite any price pressure. The broader landscape is still ripe for higher gold prices. Spain is still facing a potential downgrade from Moody's after Standard & Poor's slashed Belgium's rating. Moody's has also put Greece's Ba1 rating on review for an even deeper downgrade. Although the downgrades would be no big surprise, it would ignite sovereign debt fears, which has been good for gold during this past year, Investors turn to gold during times of market uncertainty or paper currency devaluation. The U.S. dollar is subject to the latter as the Senate passed President Obama's tax deal. The bill now has to pass the House, which it's expected to do despite gripes from the Democrats. Jim Rogers: Gold Is a Bubble >> An extension of Bush-era tax cuts, continued unemployment benefits and a lax estate tax, some fear the legislation will only widen the government's $13 trillion debt hole and lead to more money printing in the future. Barclays Capital noted Thursday in its Commodity Daily Briefing that the inverse correlation between the U.S. dollar and gold "has started to become stronger (approximately 30%)" and the metal will be subject to future dollar gyrations. If the dollar takes a hit, if a QE3 comes into the picture to pay for the tax bill, that would only be good for gold.
Steve Ricchiuto, MZUHO Securities chief economist, and Bob Michele asset management global CIO with JP Morgan (JPM), joined BloomberTV's 'Bloomberg GO' to discuss the economy and the Fed raising rates.