Gold lackluster ahead of G-20

Prices waver as investors wait to see how the US dollar will be affected by this weekend's summit.

By TheStreet Staff Oct 22, 2010 12:11PM

thestreetBy Andrea Tse, TheStreet


Gold prices exhibited lackluster action Friday as investors braced for more clarity on the direction of the U.S. dollar, closely monitoring news out of the G-20 meeting of finance ministers and central bank governors in South Korea this weekend.


Gold for December delivery was down $1.90 to $1,323.70 an ounce at the Comex division of the New York Mercantile Exchange. Gold Friday has traded as high $1,328.80 and as low as $1,315.60.


The U.S. dollar index was up 0.1% at $77.52, while the euro was down slightly to $1.39 against the dollar. The spot gold price was down $1.70, according to Kitco's gold index.


As EverBank World Markets' assistant vice president Mike Meyer pointed out, one of the main drivers behind the U.S. dollar at the moment is uncertainty over the outcome of the G-20 meeting this weekend.

"Currency traders seem a bit sensitive and risk averse as an official from a G-20 country said global finance ministers are planning to say members will refrain from competitive undervaluation of currencies to alleviate trade tensions," Meyer said in a daily report.


"The official also said they want a more market-determined exchange-rate system that minimizes adverse effects of excess volatility and disorderly movements in exchange rates. At the same time, we have Geithner saying he's trying to persuade leaders that the U.S. isn't trying to weaken the dollar." Meyer noted that, furthermore, Brazil's finance minister had claimed he had spoken to U.S. Treasury Secretary Timothy Geithner over the phone about working out an agreement to prevent the dollar from falling.


Meyer echoed the thoughts of many investors when he said, "I just don't understand how proclamations of a strong dollar, or at least one that isn't weakening, can even be discussed at a time when the Fed is talking about adding quantitative easing."


On Thursday, gold prices fell as the jobs report came out better than expected, a number of positive earnings reports emerged and the broader stock indices rose. Stocks ended higher yesterday after a volatile trading session.


Initial weekly claims declined by 23,000 to 452,000 in the week ended Oct. 16, from the week before. However, the extent of the decline was amplified by the Labor Department's upward revision of the previous week's figure to 475,000 from 462,000. Analysts on average predicted that initial claims would fall by 7,000 to 452,000, according to


"With risk appetite and investor confidence showing signs of returning, there is the risk of further profit taking in both gold and silver; however with background dollar weakness lurking, investor concerns about the long-term inflationary implications of QE (quantitative easing) and physical demand at its seasonally strongest, we expect dips to remain well supported and viewed as a buying opportunity," research analyst James Moore said in a daily report.


In a daily report, BGC Financial technical strategist Roger Volz said gold has moved into the beginning of a 21 to 55 day corrective phase below $1,346 with its next downside continuation line at $1,310.


Silver prices were down 2 cents to $23.12 per ounce, while copper was flat at $3.78 per pound.


Gold mining stocks, a risky but sometimes more profitable way to invest in gold, were trading in mixed territory Friday morning.


Barrick Gold (ABX) was up 0.4% to $45.63, and Agnico-Eagle (AEM) was gaining 1.2% at $70.24. Newmont Mining (NEM) was slipping 0.1% to $59.16 and Freeport-McMoRan Copper & Gold (FCX) was down 2.4% to $94.12.


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Oct 22, 2010 3:40PM

another G20 meeting; canada just held one what a great way for these elite a-holes to vacation at tax payers expense........who's pelosi taking this time for her entourage besides her entire voting population(yes i know she isn't going just love to throw her ugly fake azz smile out there for all to enjoy)??


no i haven't left, there is no closing timeMartini glassOpen-mouthedMartini glass

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