Gold Inches Up Overnight But Falls Back

Despite a slight dip shortly after the beginning of overnight trading, gold managed to inch above $1,165 and briefly touch $1,170. The height of the overnight was made around 3 AM ET, when the price touched $1,170.40. Pulling back, the metal still stayed above $1,165 until about 7:30 AM when it dipped to $1,161.80 before rebounding a little. As of 8:05 AM ET, the spot price was $1,163.50 for a gain of $0.20 on the day. The Kitco Gold Index attributed -$6.50 to predominant selling and +$6.70 to weakening of the greenback.

The U.S. Dollar Index spent some of last night drifting, but it began falling around 9:15 PM. Tumbling a bit after breaking through 81.95, its fall climaxed at just above 81.5 before it double-bottomed and started pulling up at 7:20 AM. As of 8:12, it was at 81.65.

A Wall Street Journal report said gold crept higher because of bargain hunting induced by a steadier market.

"It looks like the selling has eased off a bit," said Afshin Nabavi, head of trading at Swiss trading house MKS Finance. "I don't know if it's finished or if it's just waiting for time."

Demand for physical gold has absorbed a lot of selling pressure, and there are sufficient bids in the market to hold gold above $1,160 in the near-term, he said.

The article also mentions a large drop in the holdings of the SPDR Gold Shares Trust, by 18.55 tonnes to 1,282.38 tonnes.

An earlier Reuters report ascribed last night's rise to physical buyers stepping in as well as bargain hunting.

"Signs of slowdown in the U.S. recovery (yesterday) sent out ripples again, so we've seen bargain hunters coming in given there's still a long way to go in terms of economic recovery," said TheBullionDesk.com analyst James Moore.

He added: "There's been good demand from physical sector this morning (but) over next week or two my outlook is for sideways to lower trade. We saw 18 tonnes of gold cut from the SPDR gold trust yesterday."

The article also noted that, despite the price relief for jewelers which many were happy to take advantage of, negative sentiment still weighed on the market.

The weekly jobless-claim numbers came in; the initial-claims number of 457,000 was slightly lower than expected. Although continuing claims rose, the four-week moving average of initial claims fell. After sinking to around $1,160, gold blipped up just beforehand but fell right after the data was released in a short-lived downward spike that made a new daily low of $1,159.10. As of 8:54 AM, the spot price was $1,162.20 for a drop of $1.10 on the day. The Kitco Gold Index assigned -$7.90's worth of change to predominant selling and +$6.80's worth to greenback weakness. The U.S. Dollar Index managed to climb up to almost 81.75 but began dropping at 8:36. As of 8:57, it was at 81.61.

Again, the pit session started off less than encouragingly. Still, gold's floor of $1,160 has remained solid if occasionally flexible. The rest of the pit session may see the metal holding steady.