New York gold futures erased initial gains to finish lower on Friday as funds sold bullion for liquidity, capping a volatile week which saw gold made several runs toward $1,000 an ounce but was met with heavy resistance each time. Platinum and palladium contracts also pulled back sharply on recession fears in a broad-based commodities sell-off.
"Gold is having trouble here, as it bounced off the $990 area again. It was up sharply but ended lower at the end. To me, it's very negative sign," said Leonard Kaplan, president of Prospector Asset Management at Evanston, Illinois.
"It seems like people are getting out of everything because the hedge funds that are long gold are having troubles in other areas and they need to sell to raise cash," Kaplan said.
The active gold contract for April delivery on the Comex division of the New York Mercantile Exchange settled down $2.90 to $974.20 an ounce after bottoming at $971 earlier. In the morning sessions, gold futures had made a run to the $1,000 level, trading as high as $990.70 an ounce. However, a turnaround in the dollar's strength prompted selling, putting a kibosh on bullion's rally.
George Gero, vice president of RBC Capital Markets Global Futures, said that sell-stops were triggered and investors opted to close out positions in gold futures before the weekend.
He also cited selling by hedge funds for cash needs. The dollar rebounded from record lows triggered by a surprise contraction in US payrolls as attention shifted to moves by the Federal Reserve to ease tight liquidity conditions. Returns on US holdings are eroding for foreign investors and many see precious metals as hard assets that can protect portfolios.
US employers cut payrolls for a second straight month during February, slashing 63,000 jobs for the biggest monthly decline in nearly five years as the nation's labour markets weakened steadily.
"It is pertinent to remember that much of the move in gold is totally handcuffed to dollar slide and that seems to be discounted into the prices already," Pradeep Unni, assistant vice president of Vision Commodities in Dubai, told clients in a note.
At 2:15 pm (1915 GMT), spot gold was quoted at $972.60/973.40, down from $976.20/976.95 at the close on Thursday. London bullion dealers fixed the afternoon spot price at $972.50 an ounce. Comex's may silver turned to end 2.5 cents higher to $20.250 an ounce, trading between $19.915 and $20.835. Spot silver rose to $20.16/20.21 from $20.15/20.18 at Thursday's close. London silver was fixed at $20.22 an ounce.
Comex estimated final gold futures volume at 157,596 contracts and gold options at 10,737 lots. Total turnover in Chicago Board of Trade electronic 100-oz gold futures was 26,333 lots at 2:42 pm. Platinum futures ended sharply lower for a second straight day as news of South Africa increasing power supply to mines accelerated profit taking.
The April Nymex contract has finished lower for a fourth consecutive session. The active Nymex platinum contract for April delivery plummeted $159.10 or 7.2 percent to end at $2,041.70 an ounce. It had traded as low as $2,005.00 and had peaked at $2,184.90. Spot platinum fetched $2,020/2,030.
The South African government has confirmed it will let mines raise power use to 95 percent from 90 percent and the plan will be phased in over the next two weeks to avoid worsening an electricity crisis. Kaplan said that he expected the pullback in platinum would continue next week in a thinly traded market. Nymex June palladium dropped $34.20 or 6.5 percent to close at $495.00 an ounce. Spot palladium was quoted at $485/490.
Comments
Comments are closed.