Gold Slumps Below $1,180

Gold started the week fluctuating around last Friday's close; it started to inch up after dipping around 8:30 PM ET. Climbing all the way up to $1,185.10, reached around 2 AM, the metal began sliding back down to the low 1180s until 5:00. Then, it sunk as the Eurozone PMI clicked in with higher than expected growth for July. Not stopping until it reached $1,177 at 6:00, the metal meandered around that level before dipping a little further. As of 8:08 AM, the spot price was $1,175.70 for a drop of $5.70 since Friday's close. The Kitco Gold Index attributed -$8.50 to predominant selling and +$2.80 to a weakening greenback.

The U.S. Dollar Index slumped below 81.5 at the start of this week's trading. Pulling up to 81.55, it sunk back to around 81.4 before fluctuating between that level and 81.5. Sinking choppily from 3:25 AM, it bottomed at slightly below 81.35. As of 8:12, it was at 81.39.

A Bloomberg report, written before the drop, said gold was little changed.

“It seems to be bargain-hunting after price declines,” said David Thurtell, an analyst at Citigroup Inc. in London....

“Safe-haven buying seems to have faded for now,” Dan Smith, an analyst at Standard Chartered Plc in London, wrote in a report dated July 30.

Gains for spot gold may be capped around $1,190 an ounce, the 20-day moving average, Thurtell said.

The report also noted holdings of the SPDR Gold Shares Trust were unchanged on Friday.

An earlier Reuters report said gold was supported by physical buying in Asia and a weakening greenback.

Investment demand remained lacklustre, analysts said....

From a technical perspective, gold's price decline in July leaves it vulnerable to further losses, analysts said.

"The weekly trend remains bearish as we have now seen the third consecutive down week, and two consecutive weeks with lower intraday highs and lows," ScotiaMocatta said in a note.

The article also mentioned a lack of safe-haven buying due to increasing risk appetite.

A more current Wall Street Journal report says gold has been stable overall.

Friday's GDP data suggested there is still enough uncertainty regarding the speed of the economic recovery to support demand for gold as a perceived safe haven, market participants said.

But UBS analyst Edel Tully noted the metal, which remains well off its June high of $1,265, lacks any drivers to sustain a recovery.

After bottoming at below $1,175, gold pulled up in a two-stage rise that was interrupted by a two-dollar fall when the pit session opened. As of approximately 8:54 AM, the spot price was $1,180.90 for a drop of $0.50 since Friday's close. The Kitco Gold Index assigned -$5.80's worth of change to predominant selling and +$5.30's worth to greenback weakness. The U.S. Dollar Index, after that earlier recovery, continued to sink to below 81.2 before blipping up a little. As of 8:58, it was at 81.22.

So far, gold's performance hasn't been all that great but the pull-up to the $1180 level has taken the edge off the earlier decline. The rest of the pit session may be kind to the metal.