Gold prices edged higher on Friday after another day of choppy trading but the shiny metal still finished the week lower after broad commodities selling earlier in the week due in part to a strong dollar. Gold's globally traded spot contract and New York's most active futures each rose about 1 percent for the session as investors and traders pared bearish bets ahead of Monday's Memorial Day holiday, which made for a longer weekend in the United States.
Earlier in the day, gold came under pressure after a plea for help from Spain's wealthy Catalonia region. That plea forced then euro, already battered by Greece's woes, to a new 22-month low versus the dollar. As the session progressed, the precious metal recovered. "There was a little bit of book squaring up ahead of the weekend," said Bill O'Neill, an investor in gold and partner at LOGIC Advisors in Upper Saddle River, New Jersey.
"Three days of headlines is something you really don't want to be involved with," O'Neill said, referring to the period that the gold futures market on New York's COMEX would be closed before it reopens Tuesday. Traders have been reviewing their positions across US markets in the run-up to Memorial Day, many unwilling to put on excessively "short", or bearish, calls should the situation in Greece or the euro zone improve considerably before Tuesday.
In Friday's session, COMEX's most-active gold futures contract, June, settled at $1,568.90, up 0.7 percent on the day. On a weekly basis, however, June gold fell 1.2 percent due to losses during the first three days of the week, particularly on Wednesday when almost every commodity plunged. Spot gold hovered at just under $1,572 an ounce, up 1 percent on the day and down 1.3 percent on the week.
"The $1,540 level held intact yet again earlier this week, and even though there is no overwhelming physical support, or indeed investor interest, these levels are starting to look attractive, with some modest buying on the lows," Andrey Kryuchenkov, analyst at Moscow's VTB Capital, said. In the physical market for gold, buying interest from main consumer India remained light, while gold bar premiums in Hong Kong and Singapore held steady.
Premiums of gold bars in Tokyo, however, rose to as much as $1.50 an ounce above London prices, the highest since last March, as investors turned from sellers to buyers during a recent price downturn, dealers said. In other trading news, CME Group Inc, the world's largest commodities exchange, on Thursday cut margins for trading gold and some other contracts, with effect from the close of business on May 29. Margins for trading gold have been lowered by about 21 percent this year.
"Margin reductions tend to have a less immediate impact on prices than margin hikes," ANZ Bank said in a note. "Nevertheless, the reduction is likely to be mildly supportive going forward." Among other precious metals, silver was up about 1 percent at more than $28 an ounce. Spot platinum also rose about 1 percent to around $1,428 an ounce. Platinum has underperformed gold recently, with the gold/platinum ratio - which measures the number of platinum ounces needed to buy an ounce of gold - rising to its highest since the end of January at 1.1. Spot palladium climbed nearly half a percent to above $585 an ounce.