OCTOBER 19, 2011, 2:10 P.M. ET

PRECIOUS METALS: Comex Gold Falls As Dollar Steadies

By Matt Day
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Gold futures settled lower for a third day Wednesday as a rebound in the U.S. dollar and weakness in U.S. equities markets kept pressure on the precious metal.

The most actively traded contract, for December delivery, fell $5.80, or 0.4%, to settle at $1,647 a troy ounce on the Comex division of the New York Mercantile Exchange.

"We've been seeing a wishy-washy back-and-forth in metals markets, and precious metals especially," said Dave Meger, director of metals trading with Vision Financial Markets. "We're seeing strong physical demand on dips, but we don't see any ability of the market to move above that $1,680 level."

Futures in recent weeks have shuffled between $1,600 a troy ounce and $1,700 a troy ounce, rising when investors were optimistic about the global economic outlook or Europe's debt crisis, and sliding when investors were reminded of September's steep plunge.

Gold, sometimes viewed by investors as a safe harbor that should rise when the outlook for other assets was grim, has taken cues recently from moves in currencies and commodities, moving along with perceived risky assets.

The metal gained earlier Wednesday as the U.S. dollar was sharply lower against some major trading partners, but it gave up those gains as the currency rebounded midday and U.S. equities markets backed off their highs. A rising greenback makes dollar-denominated gold more expensive for buyers using other currencies.

The ICE U.S. Dollar Index was recently at 76.930, up from lows of 76.574 in earlier trading Wednesday.

"Everyone's taking a wait-and-see attitude" toward gold, said Matt Zeman, head of trading with Kingsview Financial. "The markets are kind of teetering on the day-to-day developments" in Europe.

News from the euro zone was mixed Wednesday, with thousands of protesters marching through the Greek capital to protest new austerity measures set for a vote Thursday. But the euro held in positive territory against the U.S. dollar on hopes that the currency union's bailout fund would receive a substantial boost at a summit of the region's leaders this weekend.

Analysts say gold has been supported during its recent pullbacks as physical buyers step in to lock in purchases at bargain prices compared to September's highs above $1,900.

-By Matt Day, Dow Jones Newswires; 212-416-4986; matt.day@dowjones.com

--Tatyana Shumsky contributed to this article.

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