US precious metals futures fell on Friday but minimised losses by the close as funds bought the lows, traders said, adding that thin volumes accounted for the choppy conditions and wide range, while solid technical and fundamentals support prices.
Gold fell sharply in early trading in a bout of profit taking, shortly after it hit a one-month high when the dollar tumbled on softer-than-forecast US jobs data, traders said.
Gold for August delivery at the Comex division of the New York Mercantile Exchange finished with $1.50 losses at $634.80 an ounce, in a $10 range that led up to a high at $639.50, a level unseen since June 6, and down to a strong support level at $629.50 an ounce.
But brokers said funds bought dips, pulling metal prices off the lows by the end. Trading volumes were light and even small trades moved prices quickly. "It was a slow day. Volume was way down. You saw a big injection in most metals on Thursday.
Today was the on Friday of a short week. And I think people who had business to do did it yesterday.
We saw some profit taking, and some bargain hunting on the lows. But it was really slow," "Gold is creeping higher. And though it set a wide range, it came off the highs very quickly and came off the lows quickly. But, it was mostly a day of rest," said one trader. Comex estimated a moderate 45,000-lot volume for Friday, less than the 52,944 turnover on Thursday.
"That's not exactly a killer day," said one trader. Comex gold futures charged up to month highs after US payroll data for June came in well below expectations, and the dollar fell sharply against the euro. US payrolls were reported to have grown by 121,000 in June, far less than the 185,000-consensus forecast by economists.
Analysts said the slower than expected jobs growth in June suggested the Federal Reserve might need to raise rates at a slower pace than previously thought.
As a result, the dollar gave up its steep gains against the euro, which gives overseas investors in dollar-denominated assets like gold an advantage.
While gold and other precious metals investors may have grabbed quick profits after the rally, longer-term players, like funds, saw the declines as a buying opportunity.
"There was definitely buying on the dips. Whoever sold it on the way down took some profits, but a lot of people had buy orders in at $629.50 (an ounce on August gold). So it was a pretty technical bounce back up," the broker said. He added that funds, which were absent during the rapid sell-off, begun taking new long positions at the day's lows. Spot gold edged down to $629.80/631.30 in late New York dealings off $632.20/633.70 an ounce late on Thursday.
On Friday's bullion fix in London was higher at $631.50 an ounce. Brokers said they saw some trade house selling at session peaks, but funds bought silver at the lows along with gold. Comex September silver closed with steep 18.0 cents losses at $11.4050 an ounce, in a $11.33 to $11.62 range. Spot silver lost ground at $11.29/11.39 an ounce, off the $11.52/11.62 at Thursday's close. On Friday's fix was at $11.51. Nymex October platinum lost $5.90 to trade at $1,243.70 an ounce. Spot platinum moved down to $1,228/1,233 in late New York dealings. September palladium fell $1.70 cents to $329.15 an ounce.
Spot palladium slipped to $321/326.
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