Gold Prices Fall Further Away From Long-Term High

Gold dropped on Monday in U.S. trading, pulling away from the record levels it challenged last week. Bullion for February delivery closed at $862.00 an ounce, down $3.70 on the session. Prices moved as low as $857.80 in electronic trading.

The precious metal's hedge value was lower as the U.S. dollar saw some strength against other majors. The greenback moved higher amid uncertain trading against the euro and climbed back above par against the Canadian dollar. The buck was flat with the pound and yen, but gained on the aussie.

Oil prices also fell on Monday, further reducing gold's hedge value. Crude dropped sharply on Monday in U.S. trading and fell below $95 a barrel in intraday trading, as a warm front in the Northeast has reduced the demand for heating energy. The drop took oil away from the record $100 levels of last week.

Gold also moved lower on Friday and pulled back from the 28-year high the metal reached in the previous session. The metal moved to as high as $871.80 following the release of disappointing jobs data in the U.S., but could not sustain the rally. Data showed that job growth for the month of December came in well below economist estimates and also revealed a bigger than expected jump in the unemployment rate.

Bullion chased a record high on Thursday, eventually closing up $9.10. Prices moved as high as $872.90 in mid-day trading, a 28-year high. The record-high is $875.00, reached in January of 1980. The metal also soared on Wednesday, pushed by $100 crude oil and weak ISM data. February bullion ended at $857, up $22.10 from the previous close. Crude oil traded above $100 a barrel on Thursday, helping gold's value. Crude oil prices moved lower on Friday.

There are no major economic reports scheduled for release on Monday. Tuesday, traders will watch for data on pending home sales from November. More bad news on the US housing sector will likely cement expectations for as much as a 50 basis point rate cut from the Fed later in January.