Gold bounces as consumer confidence falls

MarketWatch

Gold for February delivery (CNS:GCG4) rose $4.30, or 0.4%, to $1,245.90 an ounce on the Comex division of the New York Mercantile Exchange. March silver (CNS:SIH4) gained 5 cents, or 0.3%, to $19.98 an ounce.

Gold futures got a boost after the U.S. Conference Board reported the consumer confidence index unexpectedly fell, dropping in November to 70.4 from 71.2 in October. The U.S. dollar index (NYE:DXY) fell following the data. Downbeat economic data and a weaker dollar tend to lift the metal’s investment appeal.

“Gold keeps trying to stabilize, but rallies have stalled short of resistance in the $1,250 to $1,260 range,” said Colin Cieszynski, senior market analyst at CMC Markets, in an email interview. “With political and financial tensions easing, inflation falling and physical investment and jewelry down, the interest in precious metals as a haven for capital continues to be eroded.”

Prices for the yellow metal’s February contract slipped $3 on Monday, pressured in the wake of Iran’s deal with the West. The agreement, among other things, calls on Tehran to stop its production of near-weapons grade nuclear fuel and in exchange, Iran will gain relief from Western economic sanctions.

Mike O’Rourke, chief market strategist at Jones Trading, said the way gold is moving so far this week shows that the market is questioning the Iran deal.

“Peace almost broke out in the Middle East, but Boone Pickens may have summed up the deal best by saying, ‘When you want to make a deal real bad, you will make a real bad deal,’” he said. “A deal that leaves Iran with any nuclear capability is hardly something you can call a ‘win’.”
Short-term down trend

Analysts said gold may leaning toward more losses.
MARKETS | Expanded markets coverage
• The Tell: Market news and analysis
• U.S. and Canada markets | Canada section
• Columns: Stocks | Oil | Gold | Bonds | Dollar

TOOLS AND DATA | Markets data menu
• My Portfolio: Know where your funds are?
• Real-time currency exchange rates
• After-hours stock screener

“Gold doesn’t look like much more than a long-term hedge today,” said Adam Koos, president of Libertas Wealth Management Group. “I’m sure I’ll own it again as I think it has potential left, but not yet.”

For now, momentum and technical traders are dominant, said Mark O’Byrne, executive director at GoldCore.

The short-term trend is down and “gold may incur further losses in the short term,” he said in an email from Dublin.

“The smart money is gradually accumulating on the dips. Dollar-cost averaging remains prudent for investors who wish to get exposure to bullion but are concerned about further price falls,” he said. Dollar-cost averaging is an investment strategy in which an investor invests a set sum in the market on a regular schedule.

Rounding out action on Comex Tuesday, other metals traded broadly lower.

January platinum (NMN:PLF4) fell $1, or 0.1%, to $1,376.80 an ounce, while March palladium (NMN:PAH4) fell $3.75, or 0.5%, to $718.40 an ounce.

High-grade copper for March delivery (CNS:HGH4) was down just over a penny at $3.22 a pound.