Gold Prices Catch Bounce

Subject: Gold Prices Catch Bounce Sun Dec 26, 2010 11:13 pm

NEW YORK (TheStreet) -- Gold prices recovered Thursday after a two-day selloff as lower prices triggered "bargain hunting."
Gold for February delivery added $9.60 to $1,392.80 an
ounce at the Comex division of the New York Mercantile Exchange. The
gold price traded as high as $1,395.60 and as low as $1,381.10 during
Thursday's session.
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The U.S. dollar index was rising 0.07% to $80.08 while the euro was slipping 0.28% to $1.32 vs. the dollar. The spot gold price was up $5.70, according to Kitco's gold index.
Gold Prices Catch Bounce T24_au_en_usoz_2

Gold Prices Catch Bounce T24_au_en_usoz_2

Gold
prices shed $32 in the last two trading sessions as investors took
profits on new highs in the yellow metal. Bargain-seekers saved the day
again, stabilizing prices as they took advantage of lower prices to buy
gold. Strong demand helped gold boot its inverse correlation to the U.S.
dollar as both assets were rising Thursday.
This
price seesaw though should continue for the rest of the year. "Short
term I think we get more of the same," says Jon Nadler, senior analyst
at Kitco.com, "which is volatility [and] wild swings ... if key support
levels are broken at $1,370 and lower, we could have a more meaningful
correction."
George Gero,
senior vice president at RBC Capital Markets, was expecting gold
futures could see more margin selling Thursday and lower prices Friday
as traders are "evening out in a down week."
Nadler
suggests traders or investors who were overweight gold could lighten up
on gold positions at record high prices, but he still advocates that
10% of one's portfolio be in gold for the next 20 to 30 years.
Gold
also got a boost as uncertainty popped up in regards to the tax deal,
which now looks to have reached a standstill in the House. The House
Democratic caucus voted on Thursday to reject President Obama's tax deal
as it was "currently written." Traders had been excited about the
extension of the Bush tax cuts, unemployment benefits and business
credits hoping it would jumpstart the economy. Markets don't like
uncertainty and gold prices were benefiting.

Gold was also
fulfilling its role Thursday as a safe-haven asset on eurozone issues
and tension between North and South Korea. Fitch downgraded Ireland's
debt rating to BBB+ with a stable outlook. Irish parliament will vote on
the proposed austerity measure next week, which is expected to provide
$8 billion worth of tax hikes and spending cuts so the country can
secure its $113 billion loan from the International Monetary
Fund/European Union.
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Chinese officials met
with North Korea leader Kim Jong II, and expressed continued support.
The U.S. and South Korea were hoping China would put pressure on the
country to calm its recent aggression toward South Korea

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http://www.thestreet.com/story/10943007/1/gold-prices-rise-after-two-day-slide.html

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