NEW YORK (TheStreet ) -- Gold prices were dragged down with oil prices Friday as an earthquake in Japan sparked fears of a demand crunch.
Gold for April delivery was slipping $3.50 to $1,409 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,419.30 and as low as $1,404.80. The spot gold price was losing $1.80, according to Kitco's gold index.
The worst earthquake in Japan for 140 years was squeezing global markets as investors tried to digest how this would affect neighboring countries, demand for commodities and curtail a worldwide economic recovery.
The headline disaster should have caused a big rally into gold as a safe-haven asset especially as the death toll kept rising. But gold was moving with oil prices and black gold was down more than $2 as investors worried that the tragedy in Japan would stop local oil demand. Oil prices fell below the $100 mark in early trading as reports circulated that refiners in the country were shut down.
Oil prices were also under pressure as OPEC said total crude oil production rose by 110,000 barrels a day in February to more than 30 million. Saudi Arabia production rose to almost 9 million barrels a day, more than offsetting declines in Libya of 232,700 barrels.
"Oil has been in the driver's seat," says Jon Nadler, senior analyst at Kitco.com, dominating everything from gold to stocks to currencies. "Gold and equities should be parting ways and going in different directions. It's not happening."
The dollar was rising against the euro. The U.S. currency could see more safe-haven demand from investors, which would weigh on dollar-backed commodities like gold and silver. Nadler thinks the volatility in gold and silver will continue.
James Moore, research analyst at FastMarkets, says that both metals could be subject to even more profit taking "but given the mix of inflation concerns and the situation in the MENA and EU debt we expect dips will continue to be viewed as bargain hunting opportunities."
