Gold slid to three-month lows on Friday as the dollar rose versus the euro amid fears over the eurozone economy, surrendering earlier small gains it made after payrolls data briefly pressured the US currency. Spot gold fell to a low of $1,043.75 and was bid at $1,050.05 an ounce at 1656 GMT, against $1,062.60 late in New York on Thursday.
US gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell $12.40 to $1,050.00 an ounce. Gold is extending losses after prices fell 4 percent on Thursday in the wake of a news conference by European Central Bank chief Jean-Claude Trichet which fuelled jitters over the state of the euro zone economy, knocking the euro.
"Some damage was done yesterday," said Thomas Hartmann, a broker/analyst at California-based Altavest Worldwide Trading. "If you are bullish on gold, it is important that the market holds the $1,050 an ounce level." Gold is vulnerable to extending recent sharp losses to reach $1,020-1,030 an ounce if support at current levels fails to hold, and may face a deeper retracement below $1,000 if it breaks that level, technical analysts said.
"That whole area is now becoming more and more important as the next barometer of gold sentiment on a trading basis," said Redtower Research analyst Gerry Celaya. Investment in gold-backed exchange-traded funds was lacklustre, with holdings of the world's biggest, New York's SPDR Gold Trust falling 5.8 tonnes or 0.5 percent on Thursday.
However, premiums for gold bars in Asia were steady above $1 on Friday as jewellers made last-minute purchases ahead of the Lunar New Year, with bargain hunting from other Asian consumers also emerging as bullion held near three-month lows. Silver also tumbled to its lowest since early September at $14.63, tracking losses in gold. It was later at $14.73 an ounce versus $15.23.
Platinum and palladium also hit 2010 lows on Friday at $1,444 an ounce and $379.50 an ounce respectively. Platinum was later at $1,457 an ounce versus $1,499.50, while palladium was at $389.50 against $406.50. Holdings of new platinum and palladium-backed ETFs launched in New York last month have stabilised after rising sharply in the first days of their existence, prompting price gains. Holdings of ETFS Physical Platinum Shares were unchanged for a third session at 244,941 ounces, while those of ETFS Physical Palladium shares were steady for a seventh day.