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Gold (1596.80) Eases Below $1,600 In Thin Trading
Dec 27, 2011 (Dow Jones Commodities News via Comtex) -By Matt Day

--Comex February gold falls $9 to $1,597 a troy ounce
--Steady dollar keeps potential buyers wary
--Gold could test $1,560 after failing to hold above $1,600, analyst says

NEW YORK (Dow Jones)--Gold futures slipped below $1,600 in quiet trading on Tuesday, pointing lower for a fourth consecutive session as investors pared their holdings of the precious metal ahead of the end of the year.

The most actively traded gold contract, for February delivery, recently traded down $9, or 0.6%, at $1,597 a troy ounce on the Comex division of the New York Mercantile Exchange.

After pushing to a one-week high on Dec. 20, gold futures have settled lower for three consecutive sessions as investors squared their books in light holiday trading. Comex trading was closed on Monday in observance of the Christmas holiday, and trading activity was light on Tuesday as many trading desks in the U.S. and Europe remained thinly staffed.

A steady U.S. Dollar was keeping potential gold buyers from moving into the market, said Frank Lesh, a broker and analyst with FuturePath Trading.

The ICE US Dollar Index was recently little changed from its levels late Friday in New York, and remained within striking distance of the 11-month highs reached in mid-December.

Investors looking for a safe harbor from Europe's debt crisis and a slowdown in global growth have generally favored cash instead of gold, helping to keep the precious metal well short of this year's record highs above $1,900 an ounce. A strong dollar can also pressure gold futures by making them appear more expensive for buyers using other currencies.

Gold's failure to hold gains above $1,600 will likely bring in sellers who place bets based on trading patterns, analysts with TD Securities said in a note, opening the market up to a declines to the $1,560 level.

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

(END) Dow Jones Newswires

12-27-11 0955ET

http://news.tradingcharts.com/futures/4/5/170790354.html