Gold prices dropped in early U.S. trading on Wednesday with many traders away from their desks on New Year's Eve. February gold fell to $860.80, down $9.20 on the day. The metal touched as high as $875.60 before dipping to as low as $858.40.
The dollar rose modestly versus the euro and yen but inched lower against the sterling Wednesday morning in New York on the final trading day of 2008. Its been a wild year for the dollar, which plumbed new depths against the euro over the summer before making a dramatic comeback. Gold, which usually moves opposite the dollar, reached a record high over $1,000 an ounce earlier in the year before plunging.
Economic data may attract some attention on Wednesday, with the Labor Department due to release its weekly report on initial jobless claims. Still, trading activity is expected to be light, as market participants get a head start on the New Year's holiday. Markets are closed on Thursday.
Gold finished mildly lower on Tuesday amid light trading on the Comex. February gold finished at $870, down $5.30 for the day. The metal touched as low as $864.70. The metal is up about 5 percent on the month.
Crude oil plunged again, further hurting gold's hedge appeal. Light sweet crude fell to $37.83, down $1.20 on the day. Oil fell as low as $36.94 on the session.
Energy traders looked ahead to Wednesday's inventory report from the Department of Energy. Last week's report showed crude oil inventories decreased 3.1 million barrels in the week ended Dec. 19. Gasoline stocks increased by 3.3 million barrels in the week.
On the economic front, a Department of Labor report showed that jobless claims fell to 492,000 from the previous week's unrevised figure of 586,000. Economists had been expecting a more modest pullback from the twenty-six year high set in the previous week to about 550,000.
Meanwhile, the Mortgage Bankers Association revealed that its market index of mortgage application was basically unchanged for the week of December 26th. The week's results included an adjustment to account for the Christmas holiday. The Market Composite Index was 1245.7 compared to 1245.4 last week. On an unadjusted basis the Index slid 40 percent compared with the previous week and was up 155 percent on a year over year basis.
