Gold turns south as safe-haven demand ebbs

San Francisco (July 22)   Gold prices declined on Tuesday amid what’s shaping up to be a decent earnings season, dampening safe-haven demand that had emerged on the back of developments in Ukraine and the Gaza Strip.

Gold for August  GCQ4 -0.56%    delivery shed $7.60 to settle at $1,306.30 an ounce. September silver  SIU4 -0.06%    closed flat at $21 an ounce.

In a sign that investors have turned more upbeat, the S&P 500 set a fresh intraday record and is within striking distance of its record close set earlier this month, led by stellar results from Chipotle Mexican Grill Inc.  CMG +11.72%  

That’s quite different from a day earlier, when gold, platinum and silver all caught another lift from fears stoked by the simmering tensions abroad.

From a technical perspective, Kitco’s Kira Brecht is mostly bullish on gold.

“The near-term outlook is sideways to higher as long as support at $1,294 holds firm,” she said. “If a strong rally were seen above the ‘neckline’ trendline in the days or weeks ahead, more substantial gold market gains could be targeted into the late summer or early fall months.”

Brecht was referring to a potential “inverted head and shoulders bottom formation” she can see forming on the daily chart. The pattern is used to predict the reversal of a current downtrend. (see insert chart)

Demand for the actual metal should also help support prices, according to Bank of America Merrill Lynch metals strategist Michael Widmer .

“We believe that physical demand from emerging markets will gain further clout in the medium term as countries get more affluent, suggesting the worst may be behind the gold market,” he said.

Elsewhere in metals trading, October platinum  PLV4 -0.23%    shed $5.10 to $1,488.30 an ounce, while September palladium  PAU4 -0.17%    gave up $2.30 to $874.85 an ounce. High-grade copper for September delivery  HGU4 +0.17%    inched up a penny at $3.21 a pound.

Source: MarketWatch