Profit taking caps gold gains but yellow metal reaches new five-week high in intra-day trading.
(1888PressRelease) January 23, 2012 - MIAMI, FL - Gold prices settled slightly lower after some profit taking but reached an intra-day high of $1671, a new five-week high, Thursday before settling at $1655. A corrective pullback at this point would not be unexpected and is likely as a result of short-term profit taking following significant gains made by gold during the first two or three weeks of the year.
"Gold is holding on to gains made earlier and seems to have sustained its break through key technical levels," says Bill Hionas of Pan American Metals of Miami. "There are many factors underpinning gold, inflation fears, monetary easing by various governments and strong physical demand."
Gold is still tracking the euro, which also saw gains Thursday as both Spain and France experienced successful bond auctions, credit downgrades notwithstanding. ECB President Mario Draghi was again talking about "tentative signs" of stabilization, while going on to say that the situation could still get worse. Nevertheless, Thursday saw a 'risk on' day for the markets as news from Europe seemed marginally more optimistic. Despite the good news from France and Spain, however, Europe's troubles are still far from over and Greece's talks with its creditors ended in deadlock.
According to UBS, physical demand for gold has been strong this week, despite India's increased levies. In fact, demand from India was extremely strong both Wednesday and Thursday, suggesting the levies may actually have little effect on that country's desire for gold bullion. The Lunar New Year, which begins January 23, is also likely to spark demand for gold from many Asian countries.
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Profit taking caps gold gains but yellow metal reaches new five-week high in intra-day trading. 
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