By Barbara Kollmeyer and Sarah Turner, MarketWatch
MADRID (MarketWatch) — Gold futures rose Monday to recover a fraction of recently lost ground last week, but further moves higher for the dollar were keeping a lid on gains as investors got jittery ahead of the U.S. presidential election.
Gold futures for December delivery GCZ2 +0.54% ticked up $6.50 to $1,681.70 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.
In regular trading hours on Friday, gold futures tumbled $40.30, or 2.4%, to settle at $1,675.20 an ounce, the metal’s lowest level since last August. See: Gold drops more than $40, suffers fourth weekly loss
“Gold continues in a consolidation phase within an ongoing bull trend,” said Ross Norman, chief executive officer at Sharps Pixley.
“A lot of people are frustrated by gold’s actions since last summer, but good jobs data last Friday translated into a stronger dollar,” he said.
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“On the other side of that is gold weakness. The market is making a small, but steady recovery, but dollar strength continues to weigh heavily on gold at the moment.”
Gold losses were triggered by a better-than-expected report on U.S. employment, which showed payrolls rose 171,000 in October, well above the 120,000 new jobs that economists had expected. See: U.S. adds 171,000 jobs as hiring picks up
That news boosted the dollar. A stronger dollar tends to weigh on prices for dollar-denominated commodities such as gold, since it makes them more expensive for holders of other currencies.
The ICE dollar index DXY +0.29% recently rose to 80.729, up from 80.600 in late North American trading Friday. See: Dollar rallies as jobs data spur QE doubts
The euro EURUSD -0.2731% dropped to a nearly two-month low against the greenback on Monday amid renewed uncertainty over Greece’s next tranche of bailout money. Some caution ahead of the U.S. election also underpinned the greenback. U.S. stocks traded lower in early action and Europe and Asia stock markets also fell.
Julian Jessop at Capital Economics said that the drop for the precious metal on Friday underlined its sensitivity to expectations of further central-bank monetary support.
“Commodity markets are probably right to be thinking that they cannot rely both on a strong economic recovery in the U.S. and unlimited largesse from the Fed,” they said.
For a stronger rebound, gold will need a new catalyst, Jessop said.
“This is likely to come soon in the form of a renewed escalation of the crisis in the euro zone and a revival of safe-haven demand,” he said.
Deutsche Bank commodity strategists said that they expected a renewed weakening in the U.S. dollar to help precious-metal returns into the end of the year.
“We find a weak seasonal tendency for the U.S. dollar to display extreme weakness during December,” they said.
Across the rest of the metals complex, silver for December delivery SIZ2 +0.59% rose 11 cents to $30.97 an ounce, palladium futures for delivery in the same month PAZ2 +0.37% fell $1.45 to $598.20 an ounce, while platinum for delivery in January PAF3 -0.49% fell $1.70 to $1,543.20 an ounce.
December copper futures HGZ2 -0.65% edged down 2 cents to $3.46 per pound.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
Sarah Turner is MarketWatch's bureau chief in Sydney.
