GOLD CONSOLIDATES ON INCREASED RISK APPETITE

Following gains on Wednesday, gold is consolidating on the New York Spot Market as of 12:03 p.m. EST Thursday. Investor risk appetite has been on the upswing recently, which is putting downward pressure on gold prices as safe-haven demand wanes.

Stocks are clinging to gains Thursday from the previous day’s advance on a bigger-than-expected drop in jobless claims, which reassured investors worried about the economic outlook. While the mood on Wall Street is positive, gains are fairly tepid on the New York Stock Exchange as of 12:14 p.m. EST as some of the concerns that have dragged on stocks over the last few months remain in place. "We keep getting mixed messages, so there's nothing I can see, even on the distant horizon, that's really going to pop us out of this mode until we see a real trend in positive data," said Dan Cook, senior market analyst at IG Markets. (CNN Money, 7/8/10)

In remarks Wednesday, Dow Theory Letter’s Richard Russell advised investors, “I'm thinking of buying more bullion gold in the near future, this in view of the current correction in the gold price.” Russell cites the Fed’s efforts to combat coming deflation through devaluing the dollar as setting the stage for an environment where gold prices will continue to advance. According to Russell, “Once it is realized that the Fed is on the path to devalue the dollar, there will be a panic to buy and own gold.”