MW:Gold set for weekly loss atop 1% as dollar soars
By Barbara Kollmeyer and Carla Mozee, MarketWatch
MADRID (MarketWatch) — Gold futures fell sharply on Friday, setting up for a weekly loss, as the U.S. dollar continued to push past the psychologically important 100 yen level amid signs of modest recovery in the world’s largest economy.
Gold for June delivery GCM3 -1.82% doubled losses seen in Asian hours -- dropping $21.20, or 1.4%, to $1,447.20 an ounce during European trading hours. The precious metal sliced a weekly gain to a loss of 1.2%, on the heels of two straight winning weeks.
Gold on Thursday fell $5.10, or 0.4%, extending losses after the U.S. Labor Department said weekly initial claims for unemployment benefits fell by 4,000 to 323,000, the lowest level in more than five years and beating forecasts calling for a slight rise. A week prior the Labor Department reported the economy added 165,000 jobs in April, and that the unemployment rate slipped to 7.5% from 7.6%, blowing out forecasts.
The Federal Reserve has indicated it’s likely to taper monetary stimulus depending on improvement in the labor market. The Fed’s quantitative-easing program has been a benefit for gold, as QE tends to pressure the dollar and can lead to inflation. Gold is often seen as an inflation hedge.
Following the jobless-claims data, the U.S. dollar DXY +0.39% climbed above ÂĄ100 for the first time since April 2009, and the Australian dollar AUDUSD -0.80% fell near parity. The dollar extended gains against the yen on Friday, trading above ÂĄ101.
A stronger dollar tends to hurt prices for dollar-denominated commodities such as gold as it makes them more expensive for holders of other currencies.
Meanwhile, silver for July delivery SIN3 -1.72% on Friday fell 31 cents, or 1.3%, to $23.59 an ounce, but copper for July delivery HGN3 +0.20% rose 1 cent, or 0.3%, to $3.35 a pound.
June palladium PAM3 -2.30% fell $14, or 2%, to $700.75 an ounce. July platinum PLN3 -1.48% tumbled $19.60, or 1.3%, to $1,496.90 an ounce.
Palladium prices were on track for a weekly rise of 1%, but platinum was looking at a 0.3% drop and copper was higher by 1%. Silver prices were poised for a loss of 1.7% for the last week.
