MW: Gold slips, but set for first weekly rise in four
By Barbara Kollmeyer and Carla Mozee, MarketWatch
MADRID (MarketWatch) — Gold futures eased Friday after a string of wins and some assurance from Federal Reserve Chairman Ben Bernanke put the precious metal on track for its first weekly advance in four weeks.
Gold for August delivery GCQ3 -0.52% shed $10.40, or 0.8%, to trade at $1,269.60 an ounce in electronic trade.
Gold prices on Thursday jumped $32.50, or 2.6%, on the Comex division of the New York Mercantile Exchange. That move marked gold’s fourth- straight win, the longest winning streak since mid-March.
“Gold has turned here for a good recovery bounce, as the technicals are extremely oversold, leading to a run into the mid/upper $1,300 in coming weeks,” wrote Felix Zulauf, president of Zulauf Asset Management, in a report for Itaú BBA.
But not everyone was as upbeat as gold turned lower on Friday.
”I think gold is currently stuck between $1,150 and $1,327 (the low following the first selloff in April),” said Ole Hansen, head of commodity strategy at Saxo Bank. “Speculative investors remain short and are probably happy to be that as long $1,327 does not get breached.”
The metal’s best week since the end of June came as the U.S. dollar DXY +0.46% sharply dropped following indications by Federal Reserve Chairman Bernanke that the central bank isn’t in a hurry to raise interest rates, even after unemployment reaches the Fed’s target of 6.5%.
A weaker dollar helps dollar-denominated commodities by making them less expensive to buy for holders of other currencies. At the same time, quantitative easing by the Fed and other central banks had underpinned a long-running rally in gold prices, analysts have said.
While gold has room to gain in the short term, the “fundamentals are still not there to support a sustainable move, and after the big technical damage done, it will require a lot of time to do the repair work,” said Zulauf. “But the decline has been devastating, and the psychology resembles that of a major bottom. Perhaps fundamentals will kick in later.”
Gold futures have tumbled nearly 24% this year on worries the Fed will start winding down its bond-buying program and on continued gold sales from exchange-traded funds.
This week, Bloomberg reported that hedge-fund manager John Paulson’s PFR Gold Fund had lost 65% year-to-date.
But the correction for gold may be close to ending, Deutsche Bank said this week.
In trading Friday, September silver SIU3 -0.78% gave up 24 cents, or 1.2%, to $19.73 an ounce. Silver on Thursday jumped 79 cents, or 4.1%. September copper HGU3 -0.31% slipped 3 cents, or 1%, to $3.15 a pound.
Platinum for October delivery PLV3 -0.31% fell $3.10 to $1,404.50 an ounce, and September palladium PAU3 -0.18% gained 5 cents to $718.25 an ounce.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
