Gold and silver drift lower

COMEX gold and silver futures trimmed some of their steep losses by the close on Friday, but a midday profit-taking spree by short-term speculators sent it to its lowest close since July 26, traders said.
They said they were at a loss for a definitive explanation of the sudden sell-off that knocked precious metals off their steep session highs. Some blamed technicals, others selling in base metals, and some just attributed it to crowd psychology on a slow summer Friday.
"You could call it position squaring ahead of the weekend. The selling that started in the late morning came from base metals. That was leading the downturn, after stories of Escondida talks resuming," said one precious metals dealer.
December delivery gold finished $1.60 lower at $644.40 on the New York Mercantile Exchange's COMEX division. The range ran down to a low at $636.50 from a $655.70 high.
COMEX September silver slid 22.0 cents to close below the key psychological $12 level at $11.8850 an ounce. The range ran down to $11.77 from a session peak at $12.39.
News came out late morning that talks resumed between management at BHP Billiton's Escondida copper mine in Chile and the union to resolve a labour strike by 2,042 workers at the world's largest copper mine. Copper fell sharply and swiftly, and other metals quickly followed suit, also tumbling off sizeable early gains.
"I think there was a fair amount of flow from the base metals markets. Probably a bit of contagion from the copper market, which came lower pretty quickly. All of these markets aren't moving independently of each other," a dealer said.
With volumes light during the thin summer conditions, COMEX estimated final gold volume at 54,000 lots, traders said it was easy for short-term players to rapidly turn the market.
"My best guess is crowd psychology. It seemed like there was a big flock of selling. There was pretty steady selling in precious metals for a couple of hours," a desk broker said.
Others said technicals have been ruling trading decisions of late, and predicted the range between $635 to $655 an ounce on December gold should contain the market for now. Another chartist said he sees December gold's resistance around $666 to $668 an ounce, with support at $626. "If it gets through $626, you may see another $10 on the downside," said Scott Meyers, commodity market analyst at Pioneer Futures.
Early on Friday gold rallied with a rebound in oil prices. On Thursday, a steep decline in oil prices pulled gold futures down more than $20 when Britain announced that it had disrupted a plot to bomb airliners en route to the US Investors were concerned that air travel, and therefore demand for jet fuel, would decline on the news.
Breaking tradition, gold traders brushed off the movement in the dollar, charged up when US July retail sales jumped 1.4 percent, after a 0.4 percent decline in June, well above the 0.8 percent increase forecast by analysts. Spot gold declined to $632.20/633.20 an ounce, down from $634.80/635.55 an ounce by late New York on Thursday.
Thursday's late bullion fix in London was $644.50. Spot silver dropped to $11.87/11.95 an ounce, from $12.04/12.14 an ounce in late Thursday trade in New York. Silver was fixed on Thursday at $12.2750 an ounce. NYMEX October platinum ended $3.90 higher at $1,254.40 an ounce. Spot platinum was quoted lower at $1,240/1,245 an ounce. September palladium lost $0.45 by the end at $322.30 an ounce. Spot palladium edged down to $317/322.