NEW YORK (TheStreet ) -- Gold prices were fighting to find their footing Tuesday after plummeting 6% in January.
Gold for April delivery was adding $5.20 to $1,339.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,342 and as low as $1,332.60. The spot gold price was adding $3.90, according to Kitco's gold index.
The U.S. dollar index was sliding 0.39% to $77.44 while the euro was up 0.23% to $1.37 versus the dollar. All currencies were beating back the dollar Tuesday, which was helping gold find some support.
For a newbie gold investor, January's selloff can look dramatic. Gold rallied 26% in 2010 to then lose more than $100 from its record high. The SPDR Gold Shares(GLD_) dropped 53 tons as tactical investors dumped gold. However, short interest on the stock is 4.7%, signaling that perhaps investor sentiment is turning.
"I am going to look at the low from last Thursday, which is $1,308, and Monday's low of $1,322," says Scott Redler, chief strategic officer for T3Live.com, to determine when to start buying the GLD again. If the political unrest in Egypt spreads, Redler thinks gold prices could make another leg higher feeding off of the chaos.
"But all of a sudden if things quiet down and it starts taking out those two support [levels] ... then gold continues to be on its move lower."
Gold selloffs are nothing new. Gold dropped 3.8% in January of 2010 after rallying 24% the year before and then went on to hit an intraday high of $1,432.50 an ounce.
Gold is struggling to regain momentum as the crisis in Egypt appears more manageable despite a credit rating downgrade Tuesday by Standard & Poor's. Although rising food costs and higher inflation are starting to spread from emerging market economies to developed nations like the European Union, reporting annual inflation in January of 2.4%, investors seem to be ignoring this typically strong thesis for gold.
Investors turn to gold when paper currencies lose value as a form of money that retains some value. One possibility is that inflation fears are already baked into the gold price, which is what pushed gold past $1,000 an ounce and higher and which is now leading gold prices to stall out at current levels.
