US gold futures finished nearly two percent lower on Friday, capping a week with some volatile price swings, hurt by fund and technical selling, a sharply higher dollar and news that the United States had no plans to go to war with Iran.
The entire metal complex was hit on Friday, led by a more than 4 percent sell-off in copper due to slowing demand and inventory concerns. Silver and platinum both fell more than 2 percent.
Most-active gold for April delivery on the Comex division of the New York Mercantile Exchange settled down $11.50, or 1.7 percent, at $651.50 an ounce, traded between $648.00 and $665.30 an ounce.
Estimated volume was 28,000 contracts, and options turnover was 22,000. Turnover in the Chicago Board of Trade's electronically traded 100-oz gold contract was 67,974 contracts as of 2:21 pm EST (1921 GMT). Gold futures hit a low of $648.00 as selling intensified after US Defence Secretary Robert Gates told reporters that "we are not planning a war with Iran." Gold prices usually rise with geopolitical tensions because of the precious metal's safe-haven appeal.
Leonard Kaplan, president of Prospector Asset Management, blamed selling by funds and the April contract's failure to hold prices above a support level. "Once it broke below $660, then it violated the technical breakout. And then when the dollar started to rally, all the funds started to get out," Kaplan said.
On Thursday, gold futures hit their loftiest level since August, and they finished higher for the three consecutive sessions before Friday's sell-off. One futures commission merchant attributed gold's strength on Thursday to a technical breakout and added that it was important to climb above the $660 an ounce level.
"But this kind of reversal that we're looking at right now certainly appears like it may have been reversed," he said. He added that the reverse in the dollar's strength was one of the reasons why gold and silver were hit on Friday.
The dollar rose after US payrolls data showed moderately healthy job growth, and the greenback received an extra boost against the euro after a report said that the European Central Bank may raise rates just one more time. Gold usually moves in the opposite direction to the dollar.
The US Commerce Department said that the economy added a weaker-than-expected 111,000 jobs in January, and the unemployment rate rose to 4.6 percent for the month, the highest since a matching rate in September of last year. George Gero, vice president at RBC Capital Markets Global Futures, described the job data as "anti-inflationary."
Investors consider gold a hedge against inflation risks. Spot gold was quoted at $647.00/7.70 an ounce, compared with $657.00/7.40 traded late Thursday. London's afternoon gold fix was $645.70.
In other precious metals, Comex March silver closed down 35.0 cents, or 2.6 percent, at $13.375 an ounce, trading in a range between $13.255 and $13.755. Spot silver fell to $13.350/3.400, below its late Thursday quote of $13.620/3.690. Silver was fixed in London at $13.660 an ounce. NYMEX April platinum ended $29.30, or 2.5 percent lower, at $1,163.50 an ounce. Spot platinum fetched $1,157.00/62.00.
NYMEX March palladium finished down $6.65, or 1.9 percent, at $338.25 an ounce. Spot palladium was quoted at $331/335.00.
Comments
Comments are closed.