By William Watts, MarketWatch
NEW YORK (MarketWatch) — Gold futures dropped sharply Friday, putting the precious metal on track for a weekly loss, as weak physical demand trumped any haven-related boost from geopolitical turmoil in the Middle East and Ukraine.
December gold futures GCZ4 -1.50% fell $19.90, or 1.5%, to $1,295.90 an ounce an ounce. September silver SIU4 -1.51% lost nearly 34 cents, or 1.7%, to trade at $19.58 an ounce.
The precious metal extended losses after data showed U.S. producer prices rose just 0.1% in July, a sign of low inflation pressure. The data was in line with forecasts. U.S. stock index futures maintained gains in the wake of the wholesale inflation data and a retreat by the Empire State manufacturing survey index from a four-year high.
Analysts said weak, underlying physical demand and a lack of lasting geopolitical jitters have combined to keep gold under pressure.
“Since demand for jewelry, bars and coins has proved very weak of late, overall demand for gold is again more dependent on investors. However, investment demand is probably not sufficient to make up completely for weak physical demand in Asia at present, especially since coin sales in the West are likewise modest,” wrote strategists at Commerzbank in Frankfurt.
