<b>Gold Prices</b> Retreat Amid Waning Demand - Focus on Funds <b>...</b>

Posted: 29 Aug 2014 11:22 AM PDT

By Johanna Bennett

Gold prices dipped Friday, retreating from the highs posted yesterday as appetite for the haven waned and investors opted to lock in profits.

The most actively traded contract, for December delivery, was recently down $3, or 0.3%, at $1,287.50 a troy ounce on the Comex division of the New York Mercantile Exchange.

It's quite a change from yesterday, when prices for the same contract hit a one-week high as the turmoil between Ukraine and Russia sent investors looking for safe havens.

Today, however, investors found themselves heading into a three-day holiday weekend following news that the U.S. personal consumption expenditures price index, a key measure of inflation, rose 1.6% in July to lag the Fed's 2% long-run inflation target for the 27th straight month.

Back in 2011, many investors worried that inflation would result from the Fed's accommodative monetary policies. Gold prices soared near $1,900 an ounce. Consumer prices, however, have climbed at a tepid pace, a sign that inflation remain in check.

Also, a recovering economy, a strengthening dollar and firmer equity markets have all dimmed demand for the precious metal.

In what direction will gold head? According to analysts at Barclays Capital, the metal will fall to $1,200 an ounce during the current quarter and rebound to $1,260 an ounce by the end of the year.

The Barclays team writes:

Gold prices have been pulled higher by geopolitical tensions but pushed lower by a stronger dollar. As the seasonally strong period for consumption approaches, which normally raises the floor for gold prices, we believe that the next leg is still likely to be lower given that demand looks set to be weaker than seasonal norms would otherwise indicate.

The SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU) were both down during intraday, falling 0.2% and 0.3% respectively. The Market Vectors Gold Miners ETF (GDX) rose 0.7% to $26.65.

The leveraged tools Direxion Daily Gold Miners Bear 3X Shares (DUST) fell 2% to $15.26 and Direxion Daily Gold Miners Bull 3X Shares (NUGT) jumped 2.1% to $45.67.

Gold Prices Retreat Amid Waning Demand - Focus on Funds ...

<b>Gold Prices</b> Retreat Amid Waning Demand - Focus on Funds <b>...</b>

By Johanna Bennett

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