US gold futures ended nearly 3 percent lower on Friday as bullion closed out its worst month in a quarter century as a strong dollar and recession fears drove investors into less volatile assets. December settled down $20.30, or 2.8 percent, at $718.20 an ounce on the COMEX division of the New York Mercantile Exchange.
GOLD: Futures traded between $717.10 and $742.50. Bullion lost as much as 21 percent of its value this month alone, and is down 12 percent this year, well below the record high of $1,030.80 struck in March.
Gold hurt when the dollar and yen gained ground as investors trimmed risky currency carry trades amid recession fears. COMEX open interest, a gauge of market liquidity, dropped to slightly over 300,000 contracts, sharply below a record of nearly 500,000 in October last year. A sharp drop of the COMEX open interest signalled more unwinding of long positions as extreme price volatility has taken a toll on buying sentiment.
Tumble in open interest indicates "another big position account probably stepped to the sidelines" - FC Stone Broker George Nickas. Some buyers stayed on the sidelines to avoid volatility because of month-end position squaring by funds. The chances of another bout of selling in gold futures due to margin call requirements have diminished - Nickas.
Gold outlook bright as strong physical buying should catch up with battered futures market - Nickas. COMEX estimated final volume at 99,161 lots, and options turnover at 6,763 lots. Spot gold was at $720.35 an ounce at 2:04 pm EDT (1804 GMT), 2.1 percent lower than Thursday's close of $735.50.
SILVER: December ended down 5.5 cents at $9.73 an ounce on gold's decline. Slightly weaker stock markets failed to support industrial metals, such as silver and copper. COMEX estimated final volume at 17,130 lots. Spot silver at $9.83 an ounce, up 1.8 percent from Thursday close of $9.66.
PLATINUM: NYMEX January platinum finished $1 higher at $831.60 an ounce. Spot platinum fetched $813.50 an ounce.
PALLADIUM: December palladium closed up $2.85, or 1.5 percent, at $199.55 an ounce. Rises on bargain hunting after a recent sell-off.Spot palladium fetched $193.50.
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