NEW YORK (TheStreet) -- Gold prices were slipping Wednesday as the U.S. dollar staged a mini-rally.
Gold for April delivery was falling $4.40 to $1,072.80 an ounce at the Comex division of the New York Mercantile Exchange. Prices have traded as high as $1,083 and as low as $1,071.70. The ">U.S. dollar index was rising 0.31% to $80.01.
The dollar gained strength on Wednesday after the Commerce Department reported that the U.S. trade deficit grew to $40.2 billion in December. The better-than-expected reading increased investors' hopes of a global economic recovery. The Federal Reserve will also release a statement by Chairman Ben Bernanke on exit strategies that might include a prospectus for higher interest rates. Both news items supported the dollar and weighed on gold prices, as the commodity becomes more expensive to buy in other currencies.
One variable for gold remains European sovereign debt fears. The European Central Bank might guarantee Greek debt but not issue a comprehensive bailout. France and Germany were also expected to pledge support. There is an EU summit planned for Thursday to further discuss the situation in Greece, Spain and Portugal. The euro and gold are being held hostage by recovery fears as negative news or any default will send the currency and prices tumbling.
"While there are still concerns over sovereign debt in Europe, gold is still attached firmly to the dollar at the moment," says Will Rhind, head of U.S. Operations for ETF Securities. "[But] we think that gold has a favorable outlook [and] that the fundamentals for gold still remain intact. We think that going forward the structural weakness of the dollar will continue to help gold prices." Silver prices were slipping 6 cents to $15.37 while copper was flat at $2.97.
