US gold futures finished down on Thursday, hurt by selling by funds as prices failed to break a key technical level, but far from their session-low due to support from surging oil.
Most-active gold futures for June delivery on the Comex division of the New York Mercantile Exchange settled down $5.30 at $667.60 an ounce traded in a relatively broad range between $660.80 and $672.50. "Although we are back $6 from the lows, it just feels like they should be up given what's happening in the energy complex," said Scott Meyers, senior analyst at Pioneer Futures.
Meyers also said gold's decline on Thursday could be related to the trend that stocks and metals had been moving in tandem of late. US stocks were broadly lower after oil prices shot higher. Oil surged more than 3 percent as the stand-off over British sailors in Iranian custody and US naval actions in the Gulf escalated supply concerns.
US crude ended up $1.95 to $66.03 a barrel on Thursday. Britain sought international help to isolate Iran in a stand-off over the capture of 15 military personnel in the Gulf and Iran responded by putting off the release of a woman captive. Iran is the world's fourth biggest oil exporter. Comex estimated final exchange floor volume at 45,000 lots and options turnover at 7,000.
Turnover in the Chicago Board of Trade's electronically traded 100-oz gold contract was 51,221 lots as of 2:41 pm.
"It was just the fact that we could not break through $670 (spot basis). A lot of people's short-term target was around $672. Once it started to fail, you see some long liquidation and profit taking," said one New York precious metals broker. Spot gold was quoted at $661.20/1.70 an ounce, lower than the $666.10/6.66 quoted late on Wednesday. London's afternoon gold fix was $661.00.
Gross Domestic Product or GDP, which measures total goods and services output within US borders, expanded at a 2.5 percent annual rate instead of 2.2 percent, the government said in its final revision of fourth-quarter economic performance. The GDP report underscored Federal Reserve Chairman Ben Banana's on Wednesday's remarks about the US economy.
In his testimony to the Congress on Wednesday, Bernanke said that the Fed had not moved away from its bias toward battling inflation, but warned that risks to the economy's health have also risen. George Gero, vice president at RBC Capital Markets Global Futures, said the fact that there was no rate cut in the short term could hurt precious metals.
"Of course the reason you are selling off today is because Bernanke yesterday continuing the fight against inflation. He is dashing people's hope for a rate cut," Gero said. Gero also said that gold fell on Thursday because stop-loss orders by funds were triggered as prices kept dropping. The first notice day for the April contract on Friday, and April gold options expired on Tuesday.
But traders said the futures rollover and option expiry did not push prices down on Thursday. Philip Kalpwijk, executive chairman of GFMS Ltd, said in an interview that he expected data to show total silver jewellery demand in 2006 to drop by "significantly over 5 percent" year-on-year, largely because of a 46-percent jump in prices for the year.
Silver tracked gold's decline. Comex may silver finished down 11.5 cents at $13.340 an ounce traded between $13.180 and $13.430. Spot silver was quoted at $13.26/3.29, down from $13.37/3.40 late on Wednesday. The London silver fix was $13.340. Nymex July platinum ended down $10.20 at $1,247.60 an ounce. Spot platinum was quoted at $1,235.00/40.00. June palladium closed $1.85 lower at $356.00 an ounce. Spot palladium was quoted at $350.00/54.00.