NEW YORK ( TheStreet ) -- Gold prices followed the euro lower after Greece failed to secure its second bailout deal. Gold for April delivery closed down $15.40 at $1,724.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,740.90 and as low as $1,714 an ounce while the spot price was shedding just $4, according to Kitco's gold index. Silver prices closed flat $33.75 an ounce while the U.S. dollar index was up 0.20% at $79.10.
Gold prices have now fallen 2% in two days on a stronger U.S. dollar. The currency was helped by better U.S. economic data but also by a weak euro. The European currency was coming under pressure as the Greek government failed to agree on austerity measures needed to secure its second bailout.
"Fundamentals are still very much in place," says Adrian Day, president of Day Asset Management. There is "concern about easy money in U.S. and Europe and China and elsewhere and concern about global monetary system." The IMF forecast that China would grow 8.2% in 2012, but that it could shed up to 4 percentage points from its target if Europe enters a deep recession. The EU imported 281.9 billion euros worth of goods from China in 2010, up 31% from a year earlier. If China's growth does come under pressure, the expectation is that the Central Bank will pump more yuan into the system in the form of interest rate cuts or by lowering the amount of money banks must hold in their reserves. More money in the system is typically good for gold, but a recent problem has been, especially in developed countries, that the money supply increases but banks don't lend that money. Day thinks at some point that will reverse, "money that is created doesn't go away, it has to go somewhere ...
and that is positive for gold." Mark Arbeter, chief technical strategist at S&P Capital IQ, says that he is bullish on gold due to the weak dollar policy in the U.S. "The next major hurdle for gold is chart resistance at $1,800 an ounce." Arbeter says that "gold sentiment recently hit its lowest level since late 2008 and considering that gold has been one of the strongest markets over the past 10 years, we think this supports much higher prices." Gold mining stocks were struggling Monday. Kinross Gold ( KGC - Get Report) was down slightly at $11.11 while NovaGold ( NG) was 2.19% lower at $8.95. Other gold stocks, Agnico-Eagle ( AEM - Get Report) and Eldorado Gold ( EGO - Get Report) were mixed at $36.67 and $14.51, respectively. Randgold Resources ( GOLD - Get Report) was bucking the trend and was up 1.47% at $117.88 after the company announced it made $1.25 a share in the fourth quarter on revenue of $311.5 million. Gold production was up 4% vs. a year ago, profit was up 259% and cash costs were down $1. The company raised its dividend by 100% and said gold production for 2012 would be 19% higher, albeit at the lower end of the range. Cash costs are expected to fall to $650 an ounce and towards the $500 an ounce range by 2014 as the company mines higher grade gold. -- Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel.