With volume light over the next few days "the complex remains vulnerable to bouts of long liquidation/cash generation," said James Moore, research analyst at FastMartkets.com. But the SPDR Gold Shares ( GLD) added 6 tons Tuesday, which points to strong buying after a selloff. Moore said this suggests gold will remain cushioned and prices will push back to $1,800 an ounce. Bouts of liquidation were triggered by deflationary fears as Chinese manufacturing activity slowed in November to the lowest level in 32 months and as eurozone manufacturing remains in contraction territory. Attempts to address the debt problem in Europe haven't been enough, sparking weakness in the euro, boosting the dollar and providing a headwind for gold. With borrowing costs rising for France and Spain, the International Monetary Fund stepped in on Tuesday with plans to make loans available for creditworthy countries -- offering up to five to 10 times the amount the country in question contributes to the IMF for up to two years. Tony Crescenzi, strategist and portfolio manager at PIMCO, said the program targets smaller countries "and therefore is unlikely to lead to much in the way of new bank reserves in the global system."
Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel.