NEW YORK (TheStreet ) -- Gold prices were pulling back after a raft of discount buying sent prices soring more than $30 on Monday.
Gold for December delivery was falling $17.60 at $1,640.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,681.50 and as low as $1,636.80 an ounce, while the spot gold price was losing $15.10, according to Kitco's gold index.
Silver prices were shedding 50 cents to $30.29 an ounce while the U.S. dollar index was adding 0.089% at $79.621.
Uncertainty in Europe regarding the bailout of Greece propped up gold prices in early trading.
"Gold looks set to benefit from further flight-to-safety purchases in addition to good physical demand," said an early morning report from FastMarkets. "The metal is currently testing towards overhead resistance around $1677, which if cleared could open the way for an initial target of $1720,"
Vote: Where will gold prices finish in 2011?
Greece announced that it will not meet its 2011 and 2012 deficit forecasts but still needs its next tranche of bailout money -- 8 billion euros -- by mid-October to keep paying its bills. Greece is also having to pay a 23% interest rate to borrow money, which means their financial situation won't resolve by just cutting spending, laying off public workers and raising taxes.
Phil Streible, senior market strategist at MFGlobal believes a weak euro currency will provide more support for gold prices going forward.
"If you start seeing some kind of fiscal responsibility," then that would crimp gold buying, but "the problem is there are 17 countries, there are too many cooks in the kitchen over there and they can't agree on a proper recipe." The uncertainty will provide "some kind of bid under gold and the chart action has actually been pretty decent ... I thik the possibility of a strong rally is pretty good."
European leaders signaled that they will make a decision regarding additional aid to Greece in late October, which was later than previously expected. According to a Bloomberg report, European financial ministers are mulling technical revisions for a second Greek bailout, which could mean bondholders will take a bigger hit on Greece debt.
Gold mining stocks were mostly lower Tuesday. Kinross Gold(KGC_) was falling 4.5%% to $13.53 while Yamana Gold(AUY_) was shedding 4.4% at $12.81. Other gold stocks, Agnico-Eagle(AEM_) and Eldorado Gold(EGO_) were also trading more than 4% lower at $56.23 and $15.39, respectively.
