NEW YORK (TheStreet ) -- Gold prices took a break Wednesday as investors saw greater stability in Europe's debt situation, prompting a move out of the safe-haven asset.
Gold for December delivery was losing $4.40 at $1,825.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,848.20 and as low as $1,818.80 while the spot gold price was down $16, according to Kitco's gold index.
Silver prices were down 47 cents at $40.72 an ounce while the U.S. dollar index was falling 0.12% at $76.97 as the euro rallied slightly.
Investors pushed into stocks as gold prices were trading nearly flat. Even weak retail sales for August didn't surprise markets and didn't prompt a rush into safety.
German Chancellor Merkel will be on a conference call later today with French President Sarkozy and Greek Prime Minister Papandreou and investors will be looking for some kind of clarity or plan of attack to avoid a Greece default.
Many experts view gold's near term future as murky but think long term fundamentals are still intact. Barclays Capital wrote in a recent note that the unresolved European debt issues and weakness of the global economy creates a favorable backdrop for gold prices. "We expect price dips to be short-lived during the seasonally strong period for physical demand. Gold prices have held up and consolidated above the $1800 an ounce mark despite the dollar strengthening against the euro."
Commerzbank sites strong buying from India and China as supportive for high gold prices. "According to the National Bureau of Statistics, China's gold production soared in August by 31%, year-on-year, to 60.2 tons." This means that 454.8 tons of gold were produced in the first eight months of the year and China still imported almost 390 tons of gold in the first half of the year, according to the World Gold Council.
Continued U.S. dollar strength could pressure gold somewhat but Will Rhind, head of U.S. operations for ETF Securities, says "the picture is still very much the same for gold. The world is running out of safe havens ... but once this initial selling goes through we will see higher gold prices."
Rhind says it's not just the European situation that will drive gold, there are still high levels of inflation as well as the problem of U.S. debt. Inflation in India rose to 9.78% in August.
Gold mining stocks were modestly lower Wednesday. Barrick Gold(ABX_) was down 0.5% to $53.37 while Newmont Mining(NEM_) was losing 0.26% at $64.10. Other gold stocks, AngolGold Ashanti(AU_) and Goldcorp(GG_) were trading lower at $45.69 and $51.79, respectively.
