NEW YORK (TheStreet ) -- Gold prices were treading water Monday as jittery investors debated between the safety of gold and the risk of stocks.
Gold for August delivery was falling 2.30 to $1,253.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Monday has traded as high as $1,260.20 and as low as $1,253.30. The U.S. dollar index was adding 0.19% to $85.48 while the euro was slipping 0.32% to $1.23 against the dollar. The gold spot price Monday was falling more than $2, according to Kitco's gold index.
Gold prices saw a flurry of technical trading activity last week as options expiration and the near-end of the second quarter triggered profit-taking, book- squaring and the need for cash to cover any losses in equities. This week is shaping up to be fairly similar but add on thinning volume ahead of the long July 4 weekend as well as a slow buying season for gold jewelry to the list of catalysts for volatile gold prices.
Gold prices settled at a near record high Friday at $1,256.20 an ounce. Many analysts are looking for a strong close over $1,260 to prove that this gold rally will bump prices to $1,300 an ounce.
"I want to see more stocks in the top tier come and make new highs," says David Morgan, founder of Silver-Investor.com. "I would like to see silver trade above the $20 level. If we got all of those in let's say the next week or two at the most ... I would have confirmation ... [that] this is not just a technical rally, [that] it's something bigger than that."
The news out of the G20 summit in Toronto was of little help to gold prices. The world's leading nations agreed upon reducing their budget deficits by half by 2013 but still advocate growth. Massive austerity cuts could lead to less disposable income for consumers to buy gold, but China and India are typically the strongest buyers of physical gold vs. the U.S. and Europe, which account for more investment demand. According to the World Gold Council, total consumer demand in India for the first quarter of 2010 was 193.5 tons while China bought 105.2 tons of gold jewelry. If this strong demand can continue it might make gold prices somewhat resilient to a consumer slowdown in Europe.
