US gold futures finished lower on Friday as a rising dollar and chart-based resistance paused bullion's recent rally which was boosted by bullish investor sentiment. "Overarching right now are the technical conditions. We are trying to test previous highs, and there's been some selling against it.
And you've got a little bit of dollar strength coming back into the market," said Frank McGhee, head precious metals trader of Integrated Brokerage Services in Chicago. Most-active December gold on the COMEX division of the New York Mercantile Exchange settled down $2.90 at $753.8 an ounce. It traded between a low of $750 and a high of $757.60.
On Thursday, gold contracts hit a high of $759.30, and traders said December gold must breach above that to rise further. The dollar snapped a three-day decline to rise slightly against the euro following a strong US retail sales report, and that tame core inflation data suggested the Federal Reserve would not need to cut interest rates again soon.
In industry news, South Africa's biggest mining union said on Friday it was preparing a strike notice which it hoped to submit to authorities next week to apply for a one-day protest against deaths and accidents at mines.
South Africa's Harmony Gold said it expected to lose 1,000 kg (32,150 ounces) of gold production following the closure of its Elandsrand mine after an accident last week. Investment bank Morgan Stanley said on Friday it was introducing its 2008 gold price forecast at $800 per ounce and expected the metal to benefit from strong global growth and spreading inflation problems.
Meanwhile, bullion held by StreetTRACKS Gold Shares, which represents more than 80 percent of the world's gold held by exchange traded funds, surged to a record high of 591.68 tonnes on Friday. Spot gold also eased, after breaching $750 an ounce for the first time on Thursday. At 2:15 pm EDT (1815 GMT), bullion was quoted at $748.40/749.10, down from the New York Thursday close at $750.40/751.20. London bullion dealers fixed the afternoon spot reference price at $749.50.
COMEX estimated final volume at 84,153 contracts, and gold options were estimated at 32,477 lots. Turnover in Chicago Board of Trade electronic 100-oz gold futures was 17,730 lots at 2:31 pm.
PLATINUM, PALLADIUM RETREAT
Platinum and palladium futures declined on Friday after they rose sharply in the previous session. Floor traders said platinum's recent rally was fuelled by trade buying and strong supply-demand fundamentals. However, they warned that palladium could fall sharply as the recent strength was propelled by speculative fund buying.
NYMEX January platinum closed $6.20 lower at $1,414.20 an ounce. Spot platinum was quoted at $1,415/1,419, after it rose above $1,400 for the first time on Thursday. December palladium dropped $6.45 or 1.7 percent to end at $379.50 an ounce, after hitting a five-month high of $387 on Thursday. Spot palladium fetched $377/381.
COMEX December silver closed down 8.20 cents at $13.903 an ounce, trading between $13.865 and $13.995. Spot silver was quoted at $13.76/13.81, which was higher than Thursday's late New York quote of $13.73/13.78. London silver was fixed at $13.79.