NEW YORK ( TheStreet ) -- Gold prices slipped slightly Thursday as domestic inflation stayed in check, lending support to the U.S dollar. Gold for February delivery closed down $5.40 at $1,654.50 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,670.60 and as low as $1,649.20 an ounce during the session, while the spot price was down $6, according to Kitco's gold index. Silver prices lost 3 cents to close at $30.50 an ounce while the U.S. dollar index was down 0.36% at $80.20.
Gold prices were choppy Thursday at first, buoyed by a weaker U.S. dollar. The currency had been coming under pressure from a stronger euro, which gained steam after Spain and France both raised cash. Spain borrowed almost €7 billion at strong demand while average borrowing costs were slightly lower at 4.65%. France raised almost €8 billion. Demand was very strong and yields fell. France's auction was significant as it was the country's first attempt at raising cash since Standard & Poor's downgraded its triple A credit rating one notch.
Wells Fargo says that by 2025, 62% of China's population will live in cities and they will have money to spend. The average minimum wage has soared 20% from 2009 to 2010, household income is growing 9% a year, while consumption is growing 11%. A growing middle class will also help. By 2015, 44% of China's population will be middle class, according to Credit Agricole Securities. Steel also says that India's real output per person in 2012 is expected to be 34% compared to 2007, while China's will increase 50%. Typically the more money people have in emerging market countries that have a tradition of buying gold, the more bullish that is for gold. But demand in India has suffered of late as the rupee fell 15% vs. the dollar in 2011 with gold prices up 25% in rupee terms from July to December. The latest effect of higher import taxes on gold, now 2% of the price, also remains to be seen. Jewelry demand in the country fell only 3% in 2011 due to strong buying in the first half of the year, which offset significantly weaker demand in the third and fourth quarter, but that trend might be crimped due to these higher taxes. "Much lower volatility I think would help" Indian gold consumption, says Neil Meader, research director at Thomson Reuters GFMS, "something in an improvement in the dollar rupee would also be significant ...and that would especially be the case if general market consensus says we are looking at far stronger prices towards the back end of 2012 so people would be accelerating their purchases in the first half to get ahead of far higher prices." Meader does say that 2012 has less wedding festivals than 2011, which might leave consumers will less reasons to buy gold. Gold mining stocks were struggling Thursday. Kinross Gold ( KGC) was falling 3.85% at $9.99 while Yamana Gold ( AUY) was shedding 2.09% at $15.21. Other gold stocks, Agnico-Eagle ( AEM) and Eldorado Gold ( EGO) were trading down at $35.93 and $13.70, respectively. -- Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel.