Source: CBS.MarketWatch.com
San Francisco— Gold prices sustained a narrow loss Monday, closing just above the $390-an-ounce level as traders eyed the U.S. dollar for indications of the metal's next move may be.
"Although there are some risks from U.S. economic data this week … gold has a decent chance to rally, especially if the U.S. dollar regains its negative tone," said John Reade, an analyst at UBS in London.
Among this week's key economic data, the U.S. economy will issue fresh gross domestic product data on Friday.
For now, the dollar traded lower against the yen and euro but gained ground against the Canadian dollar.
Analysts at HSBC in London said that the dollar looks set for more gains, which would make a further fall in gold prices more likely.
With caution on the outlook for the greenback limiting any gains in the metals market, August gold closed at $390.30 an ounce on the New York Mercantile Exchange, down 20 cents. The contract, which climbed to a session high of $392.50, fell $16.20 last week.
"Gold continues to offer some buying opportunities, but may not be done with its correction here," said Kevin Kerr, a senior trader at Kwest International.
"The yellow metal has been showing signs of too much profit-taking, which may indicate a rally is near, but only if the dollar resumes its slide downward," he said.
Taking a look at the bigger picture, "prices are still trending higher, helped by expectations for flat to lower gold production this year, an improving world economy, and an accommodative Fed policy on interest rates," said Todd Hultman, president of Dailyfutures.com, a commodity information provider.
Nasdaq correlation
The price of gold "seems to be developing weakness on days the Nasdaq is weak," said Ned Schmidt, editor of The Value View Gold Report, a investment publication of Schmidt Management Co.
"This breakdown in the Nasdaq is putting severe pressure on funds to maintain their equity," he said.
As a result, funds "have been forced to raise cash by selling stocks, and by selling other positions such as gold and silver." But Schmidt considers this a "temporary phenomenon that has been profitable for buyers wise enough to step in."
Most other metals futures closed lower in Monday's action. The exception was September copper, which rose 0.2 cent to close at $1.25 per pound.
Prices for the industrial metal got a boost after the National Association of Realtors said existing home sales rose 2.1 percent last month, hitting 6.95 million units on a seasonally adjusted annual basis.
But September silver closed at $6.245 an ounce, down 10 cents. "Silver slipped with gold and base metals in the latter part of last week, [but] remains considerably above the lows seen during the Q2 sell-off," said UBS analyst Reade in a note to clients.
Reade said he expects silver to rally again this year, "although we do not expect the recent high of $8.43 to be retested in this cycle."
Elsewhere on Nymex, October platinum declined by $4.60 to end at $811.40 an ounce, and September palladium shed $2.75 to close at $220 an ounce.
Tracking inventories, copper supplies were down 732 short tons at 83,918 short tons as of late Friday, according to Nymex. Silver stocks were up 926,177 troy ounces at 115.3 million troy ounces, while gold inventories stood at 4.54 million troy ounces, unchanged from the previous day.
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