Gold prices rebounded Thursday after a two-day sell-off as stocks and the U.S. dollar went flat.
Spot gold prices climbed 0.62% to $1,713.00 an ounce as it found support at the psychologically important round-number level of $1,700.
SPDR Gold Shares ( GLD ), tracking a 10th of an ounce of bullion, added 0.75% to 166.08. It's still trading below its key 50-day moving average but has only corrected 5% from its 52-week high. Corrections of 5% to 10% are considered normal pullbacks during uptrends.
Market Vectors Gold Miners ETF ( GDX ) jumped 3% to 51.64. It appears to be finding support at its 50-day line, which is bullish.
PowerShares DB U.S. Dollar Index Bullish ( UUP ), measuring the greenback against a basket of major currencies, ticked up 0.09% to 21.93. It's consolidating below its long-term 200-day moving average, which means severe weakness.
SPDR S&P 500 ( SPY ) picked up 0.26% to 141.37.
Gold prices have fallen the past week as investors wait for the presidential election to pass, but they will rebound afterward, said Terry Sacka, chief strategist at Cornerstone Asset Metals, in Palm Beach Gardens, Fla.
"I still stand by the gradual appreciation of gold and silver as the financial condition in the West melts, repairs and retool's," Sacka said. "Nothing financially has been fixed, only shifted. Europe is in trouble and we're not too far behind. Either way, hard assets will continue to appreciate."
The bears, on the other hand, believe gold will decline further after regaining $1,700 an ounce because of slower global growth.
"All the good news was priced into gold; more quantitative easing was well advertised," said Bill Strazzullo, chief market strategist at Bell Curve Trading. "Thus far, however, we have not seen the impact in terms of better economic data. As long as the global economy continues to stumble along, deflation will be a bigger threat than inflation and gold will head lower."
Andrew Norman, an analyst at BullAndBearMash.com , also believes gold prices will fall as the dollar strengthens, owing to weakness in the euro, yen and pound.
"The underlying story in gold is the U.S. dollar," Norman said. "We remain bullish on the U.S. dollar and bearish on gold going into 2013 and likely beyond."
Jewelry Supply And Demand
Standard Bank estimates global jewelry demand will total 1,816 metric tons in 2012, down 8% from 1,973 metric tons last year.
China and India accounted for 60% of demand in the first half of 2012 at 266 metric tons and 262 tons, respectively. The biggest drop in demand came from India, where it fell 30.5% to 115 tons from the year-ago period because of higher prices and a weak rupee. India's gross domestic product growth has slowed from 9.2% in the first quarter of 2011 to 6.1% in Q4 2011 and then 5.5% in Q2 2012, which goes hand in hand with slowing income growth.
"While seasonality should support gold jewelry demand in the fourth quarter, it is clear that jewelry demand is unlikely to support the gold price as it did in previous years," Walter de Wet, a commodities analyst at Standard Bank, wrote in a daily report.
"Investment demand will have to pick up the slack. While we do believe that it is possible, it also implies one has to be more patient before rallies become sustainable. The faster the gold price rises relative to income growth, the more negative the impact will be on jewelry demand. This should provide a drag to the gold price."
Silver Price Action
Spot silver rose 1.17% to $32.20 an ounce.
iShares Silver Trust ( SLV ) jumped 1.5% to 31.17. It's fallen below its 50-day average but may be finding support at its 200-day line.
Global X Silver Miners ETF (SIL) surged 2.80% to 24.59. It's holding above its 50-day line, which means its uptrend remains in tact.
Follow Trang Ho on Twitter@TrangHoETFs.