Source: MarketWatch
San Francisco— Gold futures closed at their lowest price in over two months Friday, ending the week with a loss of almost $27 an ounce as stronger-than-expected employment data gave a lift to the U.S. dollar.
"All sorts of technical indicators that were very overbought have now either corrected or have become oversold," said Peter Grandich, editor of the Grandich Letter.
The April futures contract fell $5.70, or 1%, to close at $541.30 an ounce on the New York Mercantile Exchange, its lowest level since Jan. 5. It's down $26.70 from last week's close of $568.
The front-month contract had gained $2.70 on the New York Mercantile Exchange on Thursday, the first gain in five sessions.
On Friday, the U.S. Labor Department said nonfarm payrolls increased by 243,000 in February, well above expectations of a rise of 206,000. Meanwhile, the unemployment rate rose to 4.8% from the five-year low of 4.7% in January.
The news prompted gains in the dollar against both the euro and Japanese yen.
"The gold price is now flirting with critical support levels ($532-$535), and it faces a possible short- to medium-term trough — one that could even breach the $500 level," said Jon Nadler, an investment products analyst at bullion dealers, Kitco.com.
"However, the trading action is likely to intensify in volatility and the daily and even weekly moves will disorient many a latecomer as to the true direction of the markets," he warned.
The "ultimate target ($600) has now been delayed, but I remain of the opinion that if we did not have these troughs, then we would never be able to reach the other end," he said.
In other metals action, May silver fell 1 cent to close at $9.96 an ounce, 2.7% below last Friday's close of $10.235.
June palladium lost $2.95 to end at $289.60 an ounce — closing 6.1% below last week's close. April platinum slumped $8.60 to finish at $1,012.70 an ounce. It's down $49.80 from the week-ago close.
And May copper moved 1.45 cents higher to close at $2.21 a pound Friday, but it was still down 2.4% from last week's close of $2.264.
On the supply side, inventories of copper fell by 154 short tons to 38,130 as of late Thursday, according to Nymex.
Gold inventories were unchanged at 7.55 million troy ounces and silver supplies stood at 127.3 million troy ounces, down 587,286 troy ounces
Mining indexes turn higher
Indexes that track the metals-mining sector turned higher Friday afternoon on the heels of a five-session losing streak, but they were still trading more than 7% below the week-ago levels.
"One of the best possible indicators that support could hold [for gold] is the fact that major mining-stock indexes have turned positive," said Grandich.
Given that, he said he believes "the secular bull market remains intact."
The Philadelphia Gold and Silver Index tacked on 2.4% to trade at 127.21 points. It closed last Friday at 137.15.
The CBOE Gold Index traded at 123.39 points and the Amex Gold Bugs Index was at 292.45 points, with each up 2.3%.
Among the standouts, shares of Freeport-McMoran Copper and Gold climbed 3.7% to $50.14 and Coeur d'Alene Mines, Goldcorp and Hecla Mining each tacked on more than 3%.
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