Gold slides on Greek debt drama
Prices follow the euro lower Wednesday as investors remain jittery waiting for a Greece debt deal.
Gold (-GC) tracked the euro lower Wednesday as the market was jittery waiting for a Greece debt deal.
Gold for April delivery settled down $17.10 at $1,731.10 an ounce at the Comex division of the New York Mercantile Exchange. Gold traded as high as $1,754.80 and as low as $1,729.10 an ounce while the spot price was shedding $14.80, according to Kitco's gold index.
Silver (-SI) closed 49 cents lower at $33.70 an ounce while the U.S. dollar index was up 0.2% at $78.72.
Gold investors were jittery as Greece was still trying to secure its second bailout. Initially, gold and the euro were firmer on the notion that a deal was imminent, but they reversed direction on a media report that said the European Central Bank wouldn't help Greece reduce its debt load.
The Greek government is still trying to push austerity measures through Parliament as well as negotiate a bond swap with private investors and the European Central Bank, which would leave the investors at a loss.
However, "the near-term outlook for gold looks positive," says James Steel, analyst at HSBC. Indeed, tonnage in the SPDR Gold Shares (GLD) remained constant at $1,277 tons, despite gold's two-day, 2% decline. Gold is also finding support as Federal Reserve chairman Ben Bernanke reaffirmed his commitment of keeping rates low until the end of 2014 -- what many perceive as a weak-dollar policy.
Bespoke put out a note Wednesday saying that the U.S. dollar index was in danger of breaking below key technical levels. A substantial dollar pullback could add support to gold as the two tend to move inversely to each other.
David Banister, chief investment strategist at TheMarketTrendForecast.com, says that gold is entering the last and final stage of its bull market. "I believe that it is a 13-year cycle and we are in the fifth and final wave pattern up," he says, noting it could last for another 12-18 months.
The moderating of physical demand from China and India is also an indication of the end of the bull market, says Banister. China imported only 38 tons of gold in December, down 62% from November. Slowing growth in Asia would further impact jewelry consumption.
Frank Holmes, who is bullish on gold, thinks the metal’s price could more than double to $3,600 an ounce in 5 years. "People get so caught up with the next three minutes for gold and they should really be focused on the next three years," he says. "Does anyone really believe in the long-term strength of the U.S. dollar?"
Copyright © 2014 Microsoft. All rights reserved.
[BRIEFING.COM] The stock market finished a down week on a cautious note with small caps leading the retreat. The Russell 2000 lost 0.5%, widening its weekly decline to 2.6%, while the S&P 500 shed 0.3%. The benchmark index ended the week lower by 2.7%.
This morning, the market was provided a basis to rebound with the July employment report, which was just right for the policy doves (209K versus Briefing.com consensus 220K). It showed payroll growth that was weaker than expected, ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
VIDEO ON MSN MONEY
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'