NEW YORK (TheStreet ) -- Gold prices were selling off Friday as the U.S. dollar gained strength and investors took profits heading into the weekend.
Gold for December delivery was down $3.70 to $1,231.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Friday has traded as high as $1,235.60 and as low as $1,229.60. The U.S. dollar index was rallying 0.68% to $83.01 while the euro was down 1% to $1.27 vs. the dollar. The spot gold price Friday was slipping $1, according to Kitco's gold index.
Gold prices have rallied 1.5% this week and closed at $1,235 an ounce Thursday, which many analysts have cited as an overhead resistance level. The popular gold exchange-traded fund, SPDR Gold Shares(GLD), added almost 5 tons Thursday, 13 tons for the week, as investors piled into gold.
Investors were taking advantage of gold's recent rally to raise cash and cover losses in stocks, which look set to continue amid a lack of earnings news and economic data.
The Dow Jones Industrial Average closed down 144 points on Thursday erasing gains for the week triggered by a rise in weekly jobless claims and weak manufacturing activity in the Philadelphia region. JPMorgan also revised its third quarter GDP forecast for the U.S. to 1.5% from 2.5%. The general malaise in the markets was good for gold as investors bought the metal as wealth protection, but gold could be in for a bumpy ride ahead.
"There's still overhead resistance around $1,242, $1,245," says Jon Nadler, senior analyst at Kitco.com. "I think there is a lot of conflicting sentiment out there."
Nadler says that Goldman Sachs' recent bullish gold forecast of $1,300 is in sharp contrast to its private wealth group which is telling high net worth clients to bail out of gold leaving the metal's future murky at best.
"If you have about $100-$125 potential upside in gold, you have to weigh that against a potential $200-$250 downside risk at the moment," he said.
A stronger dollar was also weighing on gold prices . Investors have been buying other safe havens like the U.S. currency and Treasury bonds. The dollar and gold typically trade in inverse correlation to each other, although that trend can be bucked in times of severe market turmoil.
Gold investors, however, are very sensitive to negative headline news and any bad data or more signs that the U.S. economy is slowing could trigger another wave of safe-haven buying. Also recent price dips in gold have been met with bargain hunting as traders look to buy gold at "discount" prices.
