LONDON — Gold fell more than 1 per cent on Friday on the stronger U.S. dollar and lower oil prices, while investors will be watching for any news from the Group of 20 summit and U.S. economic releases for further guidance.
“Gold is still fighting the headwinds of weaker oil and the stronger dollar,” said Nick Moore, strategist at Royal Bank of Scotland.
Spot gold hit a low of $724.60 (U.S.) an ounce earlier before paring losses to trade at $727.50/729.50 an ounce at 1127 GMT, from $734.30 an ounce in New York late on Thursday.
“We are coming up to the gifting season, and there is a firmer tone across the board this morning and part of that is preparing for the Christmas run up,” Mr. Moore said.
Dealers said they expected steady physical buying from India, the world's main gold consumer, would also aid prices during the traditional wedding season, which runs until early 2009. However, trading is expected to be steady ahead of the weekend summit of industrialized and emerging nations on the global financial crisis, which has stirred fears of falling demand for commodities and prompted investors to dump risky assets, even including gold.
“The G20 meeting over the weekend will most likely create another uncertainty and prompt short-term traders to square off their positions before the weekend,” said William Kwan, bullion director at Gold Capital Management.
The market is also awaiting the latest U.S. economic figures for further signs of the health of the world's largest economy.
U.S. retail sales in October are expected to fall 2.0 per cent, compared with a 1.2 per cent fall in September, according to economists in a Reuters survey.
U.S. November preliminary consumer sentiment is also anticipated to weaken to 56.0 from 57.6 in the final October report.
The U.S. dollar's rise against the euro also pressured gold prices.
“We can continue to expect volatility for some time to come. I think the U.S. dollar very much is the driver still,” said Darren Heathcote of Investec Australia in Sydney.
The dollar has been rising since August, when markets realized the financial crisis and economic slowdown would not be confined to the United States.
The euro zone economy fell into its first technical recession in the third quarter, boosting expectations that the European Central Bank would cut interest rates in December.
Weaker oil prices also pushed gold lower. U.S. crude futures for December were down 26 cents at $57.98 a barrel at 1117 GMT.
Gold has laboured to sustain the uptrend since hitting a two-month high of $931 in early October.
Platinum traded at $831.00/851.00 from 821.50 an ounce.
Prices of the metal used to make autocatalysts have plunged about 64 per cent since a record high of $2,290 hit in March.
Johnson Matthey, the world's top platinum refiner and fabricator, will release its keenly awaited Interim Review on Tuesday.
Palladium was at $214.00/222.00 from $210.00 on Thursday and silver at $9.30/9.38 from $9.38.
