NEW YORK (TheStreet ) -- Gold prices were trading sideways Wednesday on light technical trading. The yellow metal will have to look to 2011 to see more momentum.
Gold for February delivery was adding $1.30 to $1,390.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,391.70 and as low as $1,385.60. The spot gold price was adding $2.80, according to Kitco's gold index.
The U.S. dollar index was retreating 0.22% to $80.53 while the euro climbed 0.17% to $1.31 vs. the dollar after China announced it would buy €4-5 billion in Portuguese bonds, according to reports. China in recent years had been selling euros for dollars but changed its tune Tuesday when the country announced it would support the European Union's fight against sovereign debt.
Gold prices will probably stay in no man's land for the rest of the week as trading thins out dramatically ahead of the long holiday weekend.
"Many times holiday markets are choppy," says George Kleinman, president of Commodity Resource. Kleinman is still bullish on gold prices over the long term and thinks prices could hit $1,600 in 2011. For now, though, Kleinman says gold "has been in a downtrend that ended last week and the short term trend will probably chop around a bit with an upward bias."
Kleinman isn't trading the last two weeks of the year preferring to not fight against deteriorating volume. "I don't see much happening in the next week or so" he says.
Gold prices were finding some relief on the news that the International Monetary Fund has completed its 403 tons sale of gold that it announced in September 2009. Many analysts had been worried that a large gold sale would lead to an oversupply in the market and lower prices.
Gold prices weathered the storm well, helped by ballooning investment demand. During the same time frame, the SPDR Gold Shares(GLD), the largest gold exchange-traded fund, added 236.19 tons, more than half of what the IMF was selling.
"The fact that the IMF could sell over 400 tons of gold in such a short space of time, with no market disruption, demonstrates how deep and liquid the gold market is," says Natalie Dempster, director of Government Affairs for the World Gold Council, the sponsor of the GLD. "It also reflects the fact that the majority of gold sales were conducted off market with central banks."
