After falling to 10-day lows in the going, US gold futures rebounded to end up Friday after profit-taking dried up when the euro steadied above the week's low against the dollar, trading sources said. Technical buying by funds and brokers and physical demand for gold with prices under $440 an ounce aided the market in its comeback, said traders.
"I think a lot of people were short gold from up above, looking at the dollar, and they were buying it back at the bottom of a trading gap," a floor broker said.
Gold for April delivery at the Comex division of the New York Mercantile Exchange settled 60 cents firmer to $439.70 an ounce, after moving between $436.10, which marked its cheapest price since March 8, and $440.40.
Profit taking hit prices as a pause in gold's month-long rally and a jump in open interest prompted speculators to sell the metal at week's end. "Trading has gone quiet and I think this is a dead cat bounce," said the floor trader, noting the market failed to rise very much.
"We'll have to see what happens next week." With markets expecting a hike in US interest rates by the Federal Reserve on Tuesday, the dollar gained ground as dealers sold other currencies to cash in on recent gains. The euro pared losses, however, to stand at $1.3312 after falling as low as $1.3262. On Tuesday, the US Federal Reserve is widely expected to lift rates by a quarter percent to 2.75 percent. Rate hikes tend to prop up the dollar and, as a result, weigh on gold.
But not all market watchers felt the dollar would be rising from here on out. "Our house view expects the dollar to go down (against the euro) and if that proves right we've got a target of $1.40 then that probably translates into gold at around $475," Stephen Briggs, economist with SG Corporate and Investment Banking, said.
Comex brokers put initial technical support in Comex April gold at $435/4, with stiff resistance seen up at $445. Futures set a 16-1/2-year peak of $460.50 on December 2, 2004. Spot gold changed hands at $439.00/9.70 an ounce compared with Thursday's New York close at $438.25/9.00.
The afternoon fix in London was at $437.15. May silver fell 1.0 cent to end at $7.397 an ounce, moving from $7.42 to $7.285. Spot silver last fetched $7.36/39 from $7.34/37 previously. It fixed at $7.335.
In Nymex trade, April platinum rose 50 cents to $880 an ounce.
Spot edged to $874/880. June palladium gained 15 cents to $202.80 an ounce. Spot palladium was at $199/202.