Gold Finishes Lower After A Strong Week
NEW YORK (Reuters) — Gold ended lower Friday, capping a volatile week in which the metal had risen toward its all-time high 1,030.80 an ounce as a steadily falling dollar boosted investment demand.Yet, traders said that a lack of physical demand outside of the investment sector could trigger further price weakness.Jewelry buying, which typically accounts for more than half of the total gold demand, has been lagging due to near-record-high prices.On Friday, gold was pressured as waning risk appetite cut demand for high-yielding currencies, sending the dollar up sharply against a basket of major currencies. A weakening dollar has been powering gold’s rise this week.”(This) is more a dollar story than anything else,” said Eugen Weinberg, an analyst at Commerzbank. “As long as this negative rally in the dollar continues, we will not see a trend reversal in gold.”December gold futures settled down 3.20 at 1,010.30 an ounce on the COMEX division of the New York Mercantile Exchange.On Thursday, dollar weakness lifted spot bullion to an 18-month high of 1,023.85 an ounce.Saxo Bank senior manager Ole Hansen said given the momentum gold has built up in its run towards record highs, significant dollar strength would be needed to trigger a move lower.”There has been a lot of buying into this — speculative longs are at a record high, ETF investments are at a record high — so we need to see the break above the highs from last year,” he said.Weak physical demandMiguel Perez-Santalla, vice president of sales at Heraeus Precious Metals Management, said that the gold jewelry market was “close to dead” compared with the same time a year ago. Heraeus is also a processor and supplier of precious metals.”There is no real physical buying outside of investment. It’s not a good sign in terms of the actual use of the commodity,” Perez-Santalla said.Physical demand for gold in India, a key jewelry-buying center, should re-emerge as traders stock up for the festival season. Demand has been lackluster this year as high prices put off buyers.Among other precious metals, silver, platinum and palladium also edged lower after hitting multi-month highs on Thursday, tracking gains in gold.The three metals — which unlike gold are largely industrial in use — are also benefiting from an improved outlook for the global economy, which is fueling hopes rising industrial production will cause an uptick in demand.Palladium, which is used as a component in catalytic converters, broke through 300 an ounce for the first time since September 2008 on Thursday and hit a new one year high of 304 an ounce early on Friday.Palladium was last at 299.50 against 301.50 late on Thursday, while platinum was at 1,327 an ounce against 1,335.50. Silver was at 17 an ounce against its previous finish of 17.18.
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