Source: Marketwatch
San Francisco— Gold futures fell from a one-week high near $660 an ounce Friday as a rise U.S. payrolls met most market expectations and the trade deficit narrowed, boosting the dollar and easing investment demand for precious metals.
But after climbing over the last three sessions, gold futures finished the week with a more than 1% gain.
Early Friday, the market was on its way higher "but the market perceived economic data as dollar friendly," said Peter Spina, chief investment strategist at GoldSeek.com, in e-mailed comments.
Gold for April delivery closed down $3.50 at $652 an ounce on the New York Mercantile Exchange. The contract had traded as high as $659.80 earlier in the session. It closed at $644.10 last Friday, so it was up $7.90 for the week.
U.S. jobs data showed that nonfarm payrolls increased by 97,000 in February, slightly lower than the 100,000 expected by economists surveyed by MarketWatch. It was the smallest job gain since January 2005. The unemployment rate fell back to 4.5% from 4.6%.
"The domestic employment statistics contained little in the way of a surprise," said Jon Nadler, an analyst at Kitco Bullion Dealers.
It's "better for all markets that [the data were] released and there's nothing to worry about either positively or negatively for the market, said Neal Ryan, director of economic research at Blanchard, in e-mailed comments.
"That being said, I think the fact we have had a $10 jump in oil prices in February compared to January will significantly impact the trade deficit numbers on the negative side moving forward," he said.
The U.S. trade deficit narrowed again in January, adding to the sense that the trade gap has at least stabilized and may be starting on a downward trend, a government report showed Friday. See Economic Report.
"Government reports out this morning make it seem that since we've backed off the $70 billion number recently, we're out of the woods on the trade imbalances and I don't believe that is the case," said Ryan.
Following the jobs report, the dollar rallied against the yen and rose against the euro. Strength in the dollar typically put pressure on gold.
"Gold will now be seeking to call upon its old friends: oil, the dollar, and interest rates to find better correlations and to get away from the slightly perverse focus on rising equity markets in order to steer a price course," Nadler said in e-mailed commentary.
Crude-oil futures fell under $61 a barrel Friday, ending lower for the week as traders gauged supply and demand ahead of a meeting of key oil producers next week. See Futures Movers. But overall, crude has held up fairly well even when the bottom fell out from global financial markets and most other commodities.
"Bullion will also be seeking the return of the physical buyer in order to ensure a healthy spring," said Nadler.
A mixed picture
On Thursday, gold closed up $2.60 at $655.50 an ounce, the contract's highest level in a week. It gained $16.30 during a three-session climb, which followed a five-session losing streak that drew down prices by more than $50.
"Technically, gold and silver need to complete their consolidation after the financial tsunami of last week," said Julian Phillips, an analyst at GoldForecaster.com. "Oil favors gold and the dollar, whilst stronger than earlier this week, is still looking anemic.
"Gold is still building a foundation, and waiting for triggers to send it higher," he said in e-mailed comments.
May silver shed 15 cents to close at $12.97 an ounce, nearly unchanged from the $12.96 level it closed at a week ago.
"The key to key to gold's performance over the next few weeks is how emerging market equity indices behave … because the biggest per-capita purchases of gold are made by people in countries like India, China, Malaysia, and in some Middle Eastern countries," said Steven Jon Kaplan, a senior editor at TrueContrarian.com.
In the shorter term, however, it appears unlikely that the U.S. Federal Reserve will cut interest rates, he said in e-mailed comments. That would mean that reduced buying from India, China and elsewhere would not have any positive offset and gold prices will probably fall for the next few months, he said.
But once the Fed starts to cut rates, this should cause gold prices to rise, he said. Kaplan said the market will likely see the lower price for gold in May or June — possibly about $575 an ounce — "and then gold will set a new all-time high in 2008 or 2009," he said.
Other metals prices finished mostly lower Friday, with copper the biggest loser.
May copper fell 4.95 cents to end at $2.784 a pound — 2.8% above last Friday's close of $2.707.
June palladium rose $3.35 to end at $356.40 an ounce, up 1.7% for the week, but sister metal platinum saw its April contract pull back by $10.80 to close at $1,203.70 an ounce, down 0.7% for the week.
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