Gold futures end slightly higher, but gains capped

(MarketWatch) -- Gold futures ended slightly higher on Monday, though declining crude prices and firmness in the U.S. dollar capped investment demand for the precious metal.
Gold for February delivery gained $1.30 to end at $799.30 an ounce on the New York Mercantile Exchange. Earlier, gold hit an intraday low of $792.50 an ounce.
"Gold's attempts at a meaningful rally were thwarted by a combination of a rising U.S. dollar and falling crude oil," wrote Jon Nadler, an analyst at Kitco Bullion Dealers, in a research note.
"Signs that risk aversion continues to be the year's closing theme among global investors contributed to the selling in metals, but so did the fact that we are running out of trading days and players are getting their logbooks in order," Nadler said.
On Friday, gold closed down $6 and posted a weekly gain of $2.20.
The dollar gave up a few ticks against a few major foreign-exchange counterparts Monday but began the trading week mostly higher, benefiting from U.S. fund inflow data and weak data from the eurozone.
The dollar index, which tracks the performance of the greenback against a basket of other major currencies, edged down 0.07% at 77.380. See Currencies.
"Weaker oil and a stronger dollar weigh on gold, as a stronger dollar makes gold more expensive for foreign investors and also reduces the appeal of gold as a hedge against inflation," said analysts at Action Economics.
Crude futures declined, as traders locked in gains after Algeria's oil minister said over the weekend that Organization of Petroleum Exporting Countries might increase production at its next meeting. See Futures Movers.
"Interest-rate differentials and the dollar's movements are again likely to be key to gold's price direction in the week ahead, and in addition liquidity may start to become an issue as people break early for Christmas celebrations," wrote James Moore, an analyst at TheBullionDesk.com, in a research note. Moore expects dips to be viewed as buying opportunities.
However, in the short term, "the scale of speculative longs in the market does leave gold vulnerable to selling pressure, and we still expect gold to close the year around $785 rather than above $800," Moore said.
Also on Nymex on Monday, March silver finished virtually unchanged at $13.980 an ounce compared with $13.983 on Friday. January platinum rose $24.40 to end at $1,503.60 an ounce and March palladium gained $3.95 at $361.35 an ounce.