Gold prices deflated further Wednesday, falling for a third straight day after the precious metal failed to move above $1,000 an ounce.
Gold for April delivery slipped $3.30 to settle at $966.20 an ounce on the New York Mercantile Exchange. Prices have fallen 3.6 percent so far this week, after the contract closed at an 11-month high of just over $1,000 on Friday. Prices have been on an upward climb this year as investors seek safety amid fears of a worsening economy and high volatility on Wall Street.
''There is some concern people may be trading the market since we failed to move above $1,000,'' said Tom Pawlicki, commodities analyst at MF Global Research, adding that prices could continue to face downward pressure in the near term.
Gold is still up about 9 percent this year, and analysts expect prices to move higher in the coming months as the government floods the economy with billions of dollars following the recent passage of President Barack Obama's stimulus bill.
The stimulus could trigger inflationary pressures, which would boost gold. Not onl does gold benefit in times of economic uncertainty, but it also benefits from inflation and a weak currency.
''I don't think it's a price reversal,'' said Frank Holmes, chief executive of U.S. Global Investors. ''I think in six to nine months from now, you could have prices higher because of the stimulus.''
Other metals prices were mixed. May silver fell 12 cents to $13.91 an ounce, while May copper futures rose 3.7 cents to $1.5370 a pound.
On Wall Street, the major indexes ended down about 1 percent after recovering from even steeper losses as the Treasury Department confirmed it will buy preferred shares of bank stock that can convert into common shares. Investors have been hungry for any additional details on how the government plans to restore the ailing financial system to health, so the news helped provide some clarity. However, concerns about the worsening economy still keep investors on edge. The Dow Jones industrials fell 80 points to the 7,270 level.
The dollar was mixed against other major currencies, while the yield on the benchmark 10-year Treasury note rose to 2.86 percent from 2.80 percent late Tuesday.
Energy prices soared Wednesday as investors found encouragement in a government report that showed demand for gasoline is on the rise and that crude inventories have not grown as fast as expected.
Light, sweet crude for April delivery jumped $2.54 to settle at $42.50 a barrel. Gasoline futures gained 8.1 cents to $1.165 a gallon, while heating oil rose 4 cents to $1.2477 a gallon.
Grain prices were mostly higher on the Chicago Board of Trade.
May wheat futures rose 9.5 cents to $5.3575 a bushel, while corn for May delivery added 9.25 cents to $3.7225 a bushel.
