NEW YORK (TheStreet ) -- Gold prices were slightly lower Wednesday as investors rebalanced their gold positions on the last day of the second quarter.
Gold for August delivery was down $1 to $1,241.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,246.40 and as low as $1,239.50. The U.S. dollar index was slipping 0.28% to $85.89 while the euro was rallying 0.51% to $1.22 vs. the dollar. The spot gold price Wednesday was losing more than $4, according to Kitco's gold index.
Fundamentally, gold is retaining its appeal as a safe haven asset as the metal is a safety net against a volatile stock market, but technical trading will be the short-term factor moving gold prices. Many traders wrapping up the second quarter and the first half of 2010 are adjusting gold positions to their portfolio. Some will buy gold to show they have exposure while others will sell gold to show they made a profit.
"Technically, buyers are recently re-entering with buy stops to regain previously sold positions," says George Gero, vice president of global futures at RBC Capital Markets. "Volume is not heavy as ... vacation this week has thinned the ranks of the trading desks."
The popular gold ETF SPDR Gold Shares(GLD) did manage to add more than 4 tons on Tuesday as investors bought the precious metal last minute. The State Street Global Advisors said that the GLD's assets increased 32% year to date and has broken the $50 billion mark.
"GLD is increasingly being used as part of a long-term diversification investment strategy within investors' portfolios in a variety of market cycles currently playing out worldwide," said James Ross, senior managing director at State Street Global Advisors.
The worry, however, is that this type of trading will decrease once the third-quarter starts, and traders might be more apt to sell their gold positions for cash or stocks if risk appetite improves. Summer is typically a slow buying season for physical gold as a lack of festivals in India and China leave consumers devoid of a big reason to buy gold. On the investment side, volume is fickle during holiday weeks and summer months as many traders put sell and buy stops on gold making the metal more of a trading vehicle rather than an investment.
