By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Gold prices were steadying under the key $1,700 an-ounce threshold on Friday, with investors taking a breath after a dramatic selloff for precious metals the prior session.
February gold futures GCG3 +0.07% rose $2 to $1,698.80 in early European trading hours. Gold settled the prior session at $1,696.80 an ounce, a drop of $21.20, or 1.2%, on the Comex division of the New York Mercantile Exchange. Read: Gold sinks below $1,700; silvers dives more than 4%
Investors sold gold in the wake of the Federal Reserve’s announcement on expanded monetary stimulus, plus tying future interest rate moves to the level of unemployment. Investors were also taking profits as gold has had a lengthy run higher.
Some investors said the Fed has given clear signals of nearly unlimited support for the economy, therefore propping up stocks and giving investors few reasons to hold safe haven investments such as gold. The Tell: Gold set for dramatic correction: hedge fund manager
“So, now that we are clear on the FOMC, the price pullback in gold was triggered by profit-taking before the year end,” said Andrey Kryuchenkov, VTB Capital analyst, in a note.
“We expect subdued action until the market is clear on the fiscal-cliff negotiations in the U.S. Congress, with attention turning to U.S. November industrial output numbers and [consumer prices] later today,” Kryuchenkov, VTB Capital analyst, said in a note. “As we have reiterated before, sustained gains are still unlikely as we continue in a sideways pattern near December lows.”
Economic data on Friday includes consumer prices and industrial production. U.S. stock futures were trading higher, with some help from China, where preliminary data from HSBC’s China manufacturing Purchasing Managers’ Index for December rose to a 14-month high of 50.9. Read: China manufacturing data show further improvement
The Tell: What to watch on U.S. economy on Friday
Also badly beat up the prior day, the March silver contract SIH3 +0.77% rose 31 cents, or nearly 1%, to $32.66 an ounce. On Thursday, the contract fell 4.2%, to end at $32.36 an ounce, its lowest settlement in more than a month. Silver is historically more volatile than gold. The Tell: Silver ETFs in the red as silver prices sink
The dollar was slightly lower on Friday, with the ICE dollar index DXY +0.01% , which measures the greenback against a basket of six major rivals, trading at 79.911, down from 79.925 in late North American trading on Thursday.
Within other metals contracts, March futures for palladium PAH3 +0.48% rose $1.90 to $690.25 an ounce, and those for copper HGH3 +0.64% rose 3 cents, or 0.8%, to $3.68 a pound.
January platinum futures PLF3 +0.03% rose $1.90 to $1,614.70 an ounce.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.
