Daily Gold Update

Source: Reuters

New York— The price of gold fell 2 percent to a 22-day low on Friday, as funds sold in thin trade before a three-day weekend and pursued the dollar to a one-year high against the receding euro.

Trading at the New York Mercantile Exchange wrapped up early for Monday's Independence Day holiday. Copper was another big loser at the exchange's COMEX metals division.

Gold for August delivery sank $8.30 to $428.80 an ounce — its lowest close since June 9. Only last week, gold hit its highest level since mid-March, at $445.40, as investors herded in to both the dollar and hard assets after political divisions among European Union members roiled the euro.

Gold's losses accelerated when the dollar rallied after a report showing surprisingly strong U.S. manufacturing activity reinforced ideas of further interest rate hikes a day after the Federal Reserve raised them for a ninth straight time.

The dollar reached its highest level in 13 months at $1.1941 per euro.

Rates went up by a quarter percentage point to 3.25 percent on Thursday, and the Fed repeated it would keep removing its accommodative policy at a "measured" pace.

Higher deposit rates tend to shore up the dollar and, as a result, make gold look less attractive as an investment alternative to the greenback.

"Gold was vulnerable up nearer to $440, and today we saw fund selling and liquidation," said Leonard Kaplan, president of Prospector Asset Management.

"Also, gold is coming back to its trend of having a strong inverse correlation to the dollar," Kaplan added.

Copper for September delivery ended 3.65 cents or about 2.4 percent lower at $1.4735 a lb, its weakest settlement since June 3.

At the Chicago Board of Trade, soybean futures rebounded on short covering before the July 4 break. July beans rose 21-3/4 cents to $6.73-1/2 a bushel.

Beans, along with corn, retreated from new highs this week as cooler, wetter weather moved into the U.S. Midwest.

But Illinois, the heart of the corn and soy belt, remains in drought conditions. That helped hoist July corn up 4-1/4 cents to $2.16-1/2 a bushel.

"Weather is still very much the focus. We're just at the outset here of the bulk of the corn entering into the pollination process," Citigroup analyst Dale Gustafson said.

NYMEX August crude oil ended up $2.25 at $58.75 a barrel, zeroing back in on a record high hit Monday at $60.95.