US gold futures erased earlier gains to finish lower on Monday, as sharply lower crude oil prices and a higher dollar offset light buying triggered by a strong US jobs report last Friday.
Most-active gold futures for June delivery on the COMEX division of the New York Mercantile Exchange settled down $2.50 at $676.90 an ounce, traded between $675.60 and $683.10.
Sentiment in precious metals trading was dampened by a 4 percent drop in US crude futures after Iran released 15 British sailors and marines, easing concerns over supplies from the world's fourth-largest oil exporter. Emanuel Balarie, senior market strategist at Wisdom Financial, attributed gold's decline to sliding oil prices and a strengthened dollar.
NYMEX crude futures for May delivery sank $2.77, or 4.3 percent, to finish at $61.51 a barrel on profit taking in light post-holiday volume, and as the Goldman Sachs Commodity Index roll from the May to June crude contract started.
Balarie, however, said it looked like gold was beginning to firm up, and he would be surprised if prices fell further to below $665 an ounce on a spot basis. "The fundamentals of gold look great. The technicals look pretty great. I think we see some steady support around the $665 (spot) to $670 level," Balarie said.
Spot gold was quoted at $671.30/1.80 an ounce, compared with the $674.40/4.90 quoted late on Thursday. COMEX estimated final exchange floor volume at a modest 44,000 lots and options turnover at 7,100. Turnover in the Chicago Board of Trade's electronically traded 100-oz gold contract was 19,337 lots as of 2:31 pm EDT (1831 GMT). (http://www.cbot.com/cbot/pub/page/)
NUCLEAR SABER RATTLING: Iran's nuclear saber-rattling gave bullion underlying support and stopped prices from dropping further. Iran announced on Monday it had begun industrial-scale nuclear fuel production, in a fresh snub to the UN Security Council, which has imposed two rounds of sanctions on it for refusing to halt such work.
Gold tends to rise with geopolitical tensions because of the precious metal's appeal as a haven. The dollar inched higher against the yen and the euro by Monday afternoon, holding close to a six-week high against the yen hit late last week after a strong reading on US jobs creation.
A stronger dollar weighs on gold, which becomes more expensive for buyers in areas like Europe and Asia. "The economic reports continued to show a rather strong, buoyant economy," said Stephen Platt, analyst at Archer Financial Services.
US employers added a stronger-than-expected 180,000 new jobs in March and the unemployment rate fell to a five-month low, implying the economy remains durable despite a slowdown in housing. "I think we still have inflationary fears in the background, given the strength to some of the other commodities here," Platt said. A rally in the copper market failed to boost precious metals. US copper futures ended up nearly 4 percent at $3.5060 per lb on Monday.
Speculators in gold futures cut their net long position by 1.2 percent to 93,945 contracts for the week up to April 3, from the previous week's 95,123, the Commodity Futures Trading Commission said in a report released on Friday. Open interest fell to 347,817 lots from 359,434.
There were no London fixes for gold, silver, platinum and palladium on Monday, as London and some European and Asian markets remained closed because of the Easter Monday holiday. Normal trade resumes Tuesday.
In other precious metals, silver ignored gold's losses to end higher. COMEX May silver finished up 7.00 cents at $13.810 an ounce, traded from $13.675 to $13.920. Spot silver rose to $13.71/3.74 compared with $13.68/3.71 late Thursday.
NYMEX July platinum ended $1.60 lower to $1,264.30 an ounce. Spot platinum was quoted at $1,250.00/55.00. June palladium closed up $1.60 at $358.00 an ounce. Spot palladium was quoted at $352.50/56.00.