Other metals futures stumble, but metals equities mainly rise

Gold futures closed with a loss of almost $17 an ounce Monday, giving back part of last week’s gain of nearly 4% as strength in the dollar dulled the precious metal’s investment appeal.

“The gold price was reacting only to the U.S. dollar moves and on the smallest of moves,” said Julian Phillips, an analyst at GoldForecaster.com.

The August gold contract closed at $887.20 an ounce on the New York Mercantile Exchange, down $16.50, or 1.8%. It traded as low as $879 on Nymex earlier.The contract gained 3.5% last week, but lost 50 cents on Friday.

 ”Gold has moved to a short-term overbought condition on widespread … expectations of a breakout,” said Ned Schmidt, editor of the Value View Gold Report. But in emailed comments, he called such an assumption an “error.”
“Gold is likely to test the $850 level as the Federal Reserve fails to feed the dollar bears,” he said. “That price, given the longer-term bear market for the U.S. dollar, would represent a buying opportunity.”

Looking at the bigger picture, gold’s fundamentals remain “as sound as ever and inflation and stagflation concerns [are] rising internationally,” said Mark O’Byrne, executive director at Gold & Silver Investments Ltd.

Metals investors should look for any selling in gold to be “brief and shallow,” he said in a note to clients, “especially as oil prices remain near record levels on fears that Saudi Arabia’s promise to boost output may not be enough to quell supply concerns.”
Read full MarketWatch Article from Monday Here