Gold futures succumbed on Friday to quarter-end squaring, lower oil prices and a pullback in silver, in seesaw trading that just missed resettling recent bull-market highs.
The benchmark December gold contract at the Comex division of the New York Mercantile Exchange settled $3.50 lower at $472.30 an ounce, having touched $477.80 and $471.10. At its high, gold was in easy trading distance from last week's near 18-year peak at $479 an ounce.
"It's month end, and markets, when they get to higher levels, get nervous and choppy. Nobody is going to stand in the way and be a hero," said a bullion dealer at a commercial bank. The dollar was ending firm against the euro, after gyrating on mixed data showing healthy business activity in the Midwest, but a drop in US consumer confidence.
That was another incentive to sell dollar-priced gold, even though its linkage with the euro seems to have broken down in recent weeks. Some of the inflation hedge trades in gold were cashiered as Nymex oil prices fell more than 1 percent.
But crude is still near the highs hit after Hurricanes Katrina and Rita shut down production and refining in the Gulf of Mexico, promising higher energy costs as the US winter approaches. Gold is expected to rise toward $500, until the spectres of inflation go away.
New money has poured into the market and open interest is near a record. New gold-backed investment products, most prominently exchange traded funds like streetcar's and Ushers Comex Gold Trust, have attracted new investors to the market.
"This thing started off as fundamental now it's technical as far as gold's concerned rising oil, inflationary pressures from gasoline," said a bullion trader. "We start breaking into new highs and you start getting a technical move and you get these funds that are coming in just jacking it higher," he said.
Spot gold was quoted in late New York at $468.80/9.50, down from Thursday's close at $472.40/3.20. London bullion dealers fixed gold at $473.25 in the afternoon.
Comex December silver fell 4.30 cents to $7.512 an ounce, having dealt from $7.645, its second 14-week high in two days, to $7.49. Spot silver fell to $7.44/47 from $7.49/52. It fixed at $7.53.
Nymex October platinum rose $5.60 to $930.30 an ounce.
Spot platinum fetched $929/933.
December palladium eased 20 cents to $199.80 an ounce. Spot palladium closed at $194/197.
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