GOLD & SILVER PICKS

[NYBob]

DJ PRECIOUS METALS: Gold Rebound Fades As Euro Slips From Highs
Dec 15, 2011 By Matt Day and Tatyana Shumsky

--Comex February gold down $15.80 at $1,571.10 a troy ounce
--Euro climbs back above $1.30, but gives up earlier gains
--Gold's break below its 200-day moving average seen raising chance of further declines

NEW YORK (Dow Jones)--Gold's earlier rebound on Thursday ran out of steam, as fading gains in the euro and the view that a monetary-policy boost to the euro zone was unlikely before the end of the year pushed futures into negative territory.

The most actively traded contract, for February delivery, was down $15.80, or 1%, at $1,571.10 a troy ounce on the Comex division of the New York Mercantile Exchange.

On Wednesday, gold futures sank below $1,600 for the first time since early October and settled at a five-month low. Investors shed precious metals and flocked to dollar-denominated cash after the euro slumped below $1.30 for the first time since January.

Futures staged a cautious rebound Thursday, rising as high as $1,595.80 as the euro ticked higher against the dollar and as some traders saw a bargain in the metal's steep declines. But the dollar bounced off its lows by midmorning, making dollar-denominated futures more expensive for buyers using other currencies, and gold turned lower.

"The market is still looking for the bottom," said Ira Epstein, director of Linn Group's Ira Epstein division.

The overriding concern for gold traders remains Europe's debt crisis. Prices slid this month as investors, worried about a potential euro-zone credit crunch, turned to cash instead of the perceived safe harbor of precious metals.

Gold tends to benefit from an environment of ample liquidity, and the view that the European Central Bank and the Federal Reserve were unlikely to disclose new cash-pumping measures before the end of the year has taken much of the shine off gold.

Some gold bulls had placed their bets on hopes that central banks in the U.S. and Europe would disclose firm steps to shore up the global financial system, Epstein said. "When the market got neither of those, and other [economic] fears didn't move it higher," sellers came in, he added.

Gold's decline on Wednesday saw prices breach the 200-day moving average, viewed as an important technical level, which triggered automatic selling orders and likely accelerated losses.

This is the first time since January 2009 that gold slipped below this technical indicator and "further selling is likely at first, and in the short-term we do not exclude the possibility of the price decreasing to below the $1,500 a troy ounce mark," said analysts at Commerzbank in a note to clients.

-By Matt Day, Dow Jones Newswires; 212-416-4986; [e-mail]

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; [e-mail]
(END) Dow Jones Newswires
12-15-11 1113ET

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