NEW YORK (TheStreet ) -- Gold prices were wavering as a stronger U.S. dollar curbed gains.
Gold for February delivery was adding losing $2s at $1,610.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,626.80 and as low as $1,605.60 an ounce while the spot price was down $3, according to Kitco's gold index.
Silver prices were shedding 13 cents at $28.96 an ounce while the U.S. dollar index was up 0.64% at $80.64.
Gold prices are trading around the key technical $1,615 level. George Gero, senior vice president at RBC Capital Markets, says that a close above that price could trigger buy stops, where traders jump into gold at a predetermined price, which leads to a momentum rally. "Inflation may [also] rear its head when we see fiscal stimulus on two continents."
Jeffrey Wright, senior research analyst at Global Hunter Securities, also cited inflation as a possible reason for gold's persistent 3 day rally. "I think we are seeing some signs towards moderate inflationary pressure not only in commodities but in finished goods and anything to do with inflation is good for gold."
"We've been in such a low inflationary environment, inflation between 2-3%, and if inflation increased a little bit above 3% that is a big move compared to the relative stable inflation environment," says Wright.
Higher gold prices seem to still be stymied by a stronger U.S. dollar, weaker euro and volatile stock market. Gold's connection to the "risk on trade," meaning that the metal has been rallying alongside stocks and the euro, can mean that gold is not being traded as a safe haven.
Wright thinks that if there were safe haven buyers in the market, gold would be soaring. Gold "needs an escalation for the safe haven phenomenon to kick in with either international potential conflict," referring to the West's political issues with Iran, a possible oil embargo and a power transition in North Korea.
Gero says, however, that these fundamental fears "all serve to remind investors there is strife beyond the eurozone and the economic problems."
James Moore, research analyst at FastMarkets.com, agrees saying that "tensions between Iran and the West will continue to bolster gold, as safe-haven interest increases."
