Gold Prices Plunge on Global Pressures (Update 2)

Updated from 12.05 p.m. EDT with settlement prices

NEW YORK ( TheStreet) -- Gold prices plunged Friday as Spain again failed to request a bailout and demand continued to sink in Asia.

Gold for December delivery shed $20.70 to settle at $1,724 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,744.70 and as low as $1,716 an ounce, while the spot price was down $20.60, according to Kitco's gold index.

Gold fell below $1,730 an ounce, which many investors had pointed to as lower technical price resistance of the yellow metal.

"We're hearing Europe, the financial crisis; you're starting to hear that again, so the dollar strengthened a little bit. And then you're hearing OK news out of China, so that means the Chinese central bank may be delaying they're new stimulus measures," said Yu-Dee Chang, chief trader at Ace Investment Strategists.

Silver prices for December delivery closed down 77 cents to $32.10 an ounce, while the U.S. dollar index was gaining 0.33% to $79.60.

At the second day of a two-day summit in Brussels, European leaders failed to address additional financial aid for Spain as it looked like the euro banking union would delay further decisions until 2013.

Italy said Friday that it would shrink the amount of debt it would issue through the remainder of 2012 after a huge sale of €18 billion of four-year BTP Italia bonds, according to Reuters.

China posted late Wednesday a 7.4% year-over-year increase in third-quarter gross domestic product. Further, industrial production and retail sales were both better than expected as the generally good news suggested central bank easing wouldn't be in near-term plans.

George Gero, precious metals strategist at RBC Wealth Management, noted a slowing of gold purchases in India and China as another reason for the selloff in gold ahead of the weekend.

With the open-ended, mortgage backed securities purchase program implemented by the Federal Reserve, the commonly held belief that Spain will eventually accept new stimulus and overall weakness in the global economy, long-term prognostications still point to a rise in gold prices.

Open interest also continued to fall during Thursday's trading session to 470,000 contracts, down from a high of 492,000, which suggested that investors wanted to take profits with the end of the year nearing.

Gold mining stocks were mixed Friday. Shares of NovaGold Resources ( NG) were off 2%, while shares of Barrick Gold ( ABX) were sinking 0.87%.

Among other mining stocks, Kinross Gold ( KGC) was down 0.44%, but Gold Fields ( GFI) was rising 1.8%.

Gold ETF SPDR Gold Trust ( GLD) was losing 1.2%.

-- Written by Joe Deaux in New York.

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