Source: MarketWatch
San Francisco— Gold futures closed out the week with a loss of half a percent, after retreating Friday from a quarter-century high.
Strength in energy prices, tensions in Iran and a fresh threat of terror attacks combined to lift investment demand for the metal during much of the week, but gold prices eased as analysts warned of further volatility next week and traders took profits.
Gold for February delivery closed at $554 an ounce on the New York Mercantile Exchange, down $5 for the day, and down $3 from the week-ago close of $557.
Still, the session's peak of $568.50 surpassed the $561.50 high from Tuesday, which had been the highest level the market has seen since March 1981.
"Expect volatility to go higher and trading ranges to expand," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.
But overall, "aside from the amalgam of worrisome news items coming from many corners of the globe … the investment community is also looking with apprehension at economic news and has nothing to smile about," he added.
Nadler cited al-Qaida's warning for the United States reported Thursday, as well as "Iran playing the big roulette" with the resumption of its nuclear program. In addition, downbeat economic news included disappointment over financial results reported by General Electric Co. and reported plans for layoffs at Ford Motor Co.
Gold thus "remains a beacon of safety, diversification and comfort," he said.
But the metal's also showing signs of what Nadler called "overbought relative strength."
"It also seems that the gold market has chosen not to listen to analysts blowing the caution whistle," he added.
Echoing this theme, GoldForecaster.com analyst Peter Spina said that the gold market "remains technically overbought and could see some consolidation after the strong gains with strong support around the $545 level."
Looking to next week, "consolidation is likely with a bullish undertone remaining, but pullbacks are likely to find willing buyers," he commented.
Iran, al-Qaida add support
Gold prices tacked on nearly $15 an ounce in New York dealings on Thursday after al-Qaida's Osama bin Laden warned about attacks against America in an audiotape aired by Arab TV station Al-Jazeera.
The CIA later confirmed the authenticity of the tape. Bin Laden also offered the United States a "truce" if it withdraws from Iraq and Afghanistan, an offer flatly rejected by the White House.
Meanwhile, there were reports that Iran has started to transfer its assets held in foreign accounts, perceived as a reaction to prospects for the United Nations imposing economic sanctions.
Economists at Action Economics said that there is speculation in the market that Iran may diversify some reserves into gold, another factor supporting the metal.
The Middle East nation is at loggerheads with the United States and Europe since it resumed nuclear research last week, a move that Tehran insists is aimed at producing energy for civilian use and not at creating weapons.
The Iranian central bank governor Ebrahinm Sheibani told the ISNA student news agency in Iran that it is transferring foreign reserves "wherever we see as expedient," Reuters reported.
On the supply side, inventories of copper remained unchanged as of late Thursday at 7,762 short tons, according to the New York Mercantile Exchange.
Gold supplies rose 93,597 troy ounces to 7.17 million, and silver stocks fell by 1,961 troy ounces to 121.2 million troy ounces.
Rounding out Friday's Nymex metals action, March silver closed down 17.8 cents at $8.93 an ounce, down 2.6% for the week. March palladium closed up 5 cents at $277.70 an ounce, down 2.2% for the week, and March copper finished at $2.09 a pound, down 2.1 cents for the day and down 1.1% for the week.
April platinum closed at $1,036.20 an ounce, after earlier touching a $1,056 high — its highest since 1980. It ended the day with a $12.50 loss, down 0.7% from last Friday's close.
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