NEW YORK (TheStreet ) -- Gold prices were trading sideways Friday as bargain-hunters and profit-takers rebalanced their gold holdings heading into the weekend.
Gold for August delivery was rising 10 cents to $1,222.30 at the Comex division of the New York Mercantile Exchange. The gold price Friday has traded as high as $1,223.50 and as low as $1,218.10. The U.S. dollar index was slipping 0.11% to $87.07 while the euro was rising slightly to $1.21 against the dollar. The gold spot price Friday was adding more than $3, according to Kitco's gold index.
Gold prices hit a record high of $1,254 an ounce Tuesday but for the week have risen just 0.09% ending pretty much where they started. The risk trade is dominating gold in the short term as encouraging economic data prompts investors to sell gold for stocks while negative headline news spurs a rush out of equities and into gold.
Headed into the weekend, with volume thinning, many analysts expect gold prices to stay volatile. Investors have been preferring holdings cash over the weekend to protect themselves from any bad news triggered by the BP(BP) oil spill and European Union countries. But bargain-hunters might help support higher prices as they look to buy gold at a "discount."
"Short-term gold remains at risk to ongoing pockets of long liquidation," says James Moore, analyst at thebulliondesk.com in his daily metals report. "We expect gold to find further support towards $1,200 with chart support below around $1,174."
The news Thursday that China's May exports rose almost 50% calmed jittery investors and the Dow Jones Industrial Average closed 273 points higher as investors dumped gold and rushed into equities. China, however, reported Friday that its Consumer Price Index rose 3.1% in May which was more than expected. The news could force China's central bank to take more money out of circulation to curb the risk of inflation. China has already raised the money banks are required to hold in its reserves multiple times this year to try to slow economic growth. Any further steps could weigh on markets and boost demand for gold.
Despite lower gold prices, the popular gold exchange-traded fund, SPDR Gold Shares(GLD), added almost 8 tons Thursday and now holds a record of 1,306 tons. Moore says this investor interest "continues to reflect the level of concern investors have towards the European debt situation and rising inflation indicators."
