By Barbara Kollmeyer and Carla Mozee, MarketWatch
MADRID (MarketWatch) — Gold came under increased selling pressure in electronic trade Friday, feeling the weight of the U.S. dollar’s advance ahead of the release of the widely watched monthly U.S. jobs report and after dovish comments from European central banks the prior day.
Gold for August delivery GCQ3 -1.54% doubled losses from Asia, dropping $19.40, or 1.5%, to $1,232.80. Trading on the Comex division of the New York Mercantile Exchange was due to resume later Friday following Thursday’s closure for Independence Day.
Joining gold in those losses, September copper futures HGU3 -2.38% fell 8 cents, or 2.4%, to $3.10 a pound, and September silver SIU3 -2.92% fell 64 cents, or 3.3%, to $19.05 an ounce.
The metal futures’ decline came as the dollar DXY +0.22% rose. Dollar-denominated commodities tend to come under pressure when the greenback rises, as it makes them more expensive to holders of other currencies.
The U.S. currency saw particularly strong gains against the euro and the British pound after the European Central Bank and the Bank of England on Thursday each indicated there were no plans in the pipeline to reduce monetary stimulus. European Central Bank President Mario Draghi said at a press conference Thursday that euro-zone interest rates would remain low or may even go lower.
Investors on Friday will turn their attention to U.S. jobs figures for June and what they may mean for the future of monetary stimulus from the Federal Reserve.
Fed Chairman Ben Bernanke last month said the central bank may slow the pace of bond purchases this year if the economy continues to show improvement. The Fed currently buys $85 billion a month in U.S. Treasurys to aid economic growth.
Change in the Fed’s monetary policy “is particularly bad news for precious metals. Less monetary expansion by the Fed strengthens the U.S. dollar and hence puts some downward pressure on all commodities prices,” Itaú BBA economists led by Ilan Goldfajn wrote to clients Thursday.
“[H]owever, it also increases real interest rates and reduces the risks of high inflation ahead. Both factors are particularly harmful to the price of precious metals,” said Itaú.
Economists polled by MarketWatch expected a net gain of 155,000 net jobs in June, though some expectations are closer to gains of 165,000. The unemployment rate is forecast to decline to 7.5% from 7.6%, with the Fed looking for it to fall toward 6.5% by next year.
Tracking most-active contracts, gold prices have dropped 9% since Bernanke’s talk about tapering stimulus. Gold closed the second quarter with a 23% slide. But the metal found some relief this week, with prices poised for a gain of about 1.6%, which would be first weekly rise for gold in three weeks.
Losses in base metals were also pronounced. Platinum for October delivery PLV3 -0.97% dropped $11.80, or 0.9%, to $1,335 an ounce, and September palladium PAU3 -1.91% lost nearly $12, or 1.7%, to $673.75 an ounce.
