NEW YORK (TheStreet ) -- Gold prices were stalling Wednesday as traders searched for direction and debated between riskier assets and gold as a safe-haven investment.
Gold for August delivery was losing 20 cents to $1,234.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,238.90 and as low as $1,232.40. The U.S. dollar index was adding 0.24% to $86.24 after a steady decline Tuesday. The euro gave back some of its gains and was slipping 0.46% t0 $1.22 against the dollar. The spot gold price Wednesday was rising 30 cents, according to Kitco's gold index.
Investors buying gold as a safe-haven asset pushed prices past the $1,230 resistance area Tuesday despite the Dow Jones Industrial Average's triple-digit pop, but prices Wednesday were treading water. Gold's $9 move was prompting some profit-taking but investors worried over the health of Spain and other European Union nations should support prices.
Gold has also tentatively resumed its inverse correlation to the U.S. dollar, which was weighing on prices. A stronger currency makes dollar-backed commodities more expensive to buy in other currencies. Gold prices had been bucking this trend for the past few weeks as spooked investors fled stocks for the safety blanket of the U.S. dollar and gold.
The euro's recent rally was helping the dollar and hurting gold but some analysts expect its strength to be short-lived. The EU is still being forced to deny rumors of a bailout plan for Spain and markets are losing confidence. The yield on Spain's 10-year bonds has risen to 4.79% as investors backed away from lending to the country. Any more bad headlines news out of Europe will drag on the currency but be good for gold prices as investors pile into the precious metal as a form of money that retains its value.
"Gold's a little bit in no man's land," Pratik Sharma, managing director at Atyant Capital. "Gold could probably use a little bit of a breather. A little bit of time to consolidate some of its gains before it makes its next move ... Gold should correct [from here]." Sharma still sees gold 5% to 10% higher by the end of the year buoyed by strong investment demand.
