Gold Prices Sag as Eurozone GDP Contracts (Update 1)

Updated from 10:08 a.m. EDT with settlement prices

NEW YORK ( TheStreet) -- Gold prices sagged Thursday after the eurozone reported GDP contraction in the second quarter.

Gold for December delivery fell $10.20 to settle at $1,602.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,618.90 and as low as $1,593.60 an ounce, while the spot price was dipping $9.50, according to Kitco's gold index.

"Hopes are pinned on globally coordinated central bank stimulus," said Sonny Tahiliani, precious metals managing director at MacroMoves Capital Advisors.

Silver prices for September delivery fell less than 1 cent to settle at $27.76 an ounce, while the U.S. dollar index was rising 0.05% to $82.47.

Tuesday's economic reports showed second-quarter growth in the European Union contracted 0.2%. French GDP showed no quarter-over-quarter growth. The consensus of economists expected France's economy to contract.

Germany's GDP beat expectations, but still grew only 0.3%.

Perhaps another Tuesday driver against gold prices was Great Britain's consumer price index, which showed inflation accelerated 2.6%. Economists expected a 2.3% inflation bump up.

The economic contraction in Europe could add more voices to the mix of investors who since before the summer began calling for central bank monetary easing.

Two weeks ago, the European Central Bank and Federal Reserve failed to offer any stimulus. Chinese inflation dipped last week to renew chatter that the People's Bank would implement a fresh round of easing there.

But for now, global central bankers haven't signaled any immediate measures to give gold traders hope for inflationary policy that would make the yellow metal more desirable as a haven.

Gold has held steadily above the psychological threshold of $1,600 lately, which some investors have explained is because of no bad economic news and the belief that monetary easing will eventually happen, whenever that may be.

"This combined with seasonal out-performance may produce a significant step function move up this fall in gold," said Tahiliani.

For Tuesday, though, it appears there was little for gold watchers to get excited about.

Gold mining stocks were mostly lower Tuesday. AngloGold Ashanti ( AU) led the sector lower as it was dipping 2%, while Newmont Mining ( NEM) was falling 1.1%.

Among other mining stocks, Randgold Resources ( GOLD), Agnico-Eagle Mines ( AEM) and Goldcorp ( GG) were down 1%, 0.6% and 0.3%, respectively.

-- Written by Joe Deaux in New York.

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