MW: Gold falls for 2nd day as dollar gains on rate hike concerns
By Polya Lesova & Moming Zhou, MarketWatch
NEW YROK (MarketWatch) -- Gold futures fell Monday for a second session, continuing to pull back from their record highs as the dollar rose on speculation the U.S. may raise interest rates next year, reducing gold's appeal as a hedge against a weak greenback.
Gold for December delivery dropped $23.10, or 2%, to $1,145.70 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the metal fell to $1,136.30 an ounce, the lowest intraday level since Nov. 20.
Gold tumbled 4% Friday as the dollar rallied in reaction to much better-than-expected U.S. jobs data. The data fueled expectations of a strong U.S. recovery that may prompt the Federal Reserve to lift rates earlier than some observers had forecast.
Gold futures have gained in 17 of the past 21 weeks. Before Friday's big loss, the metal had made fresh highs for 20 sessions since the beginning of November, rising above $1,226 last week.
"The sharp sell-off on Friday and the slightly lower weekly close did damage to gold from a technical point of view and could result in a further sell-off this week," said Mark O'Byrne, director of international bullion dealer at GoldCore.
"Support is at $1,100 an ounce and then at previous resistance of $1,030 an ounce."
Gold and the dollar have had a strong inverse relationship. The greenback's strength gives investors fewer reasons to buy hard assets that will hold value when paper currencies depreciate.
In recent trading, the dollar index (DXY 75.89, +0.20, +0.27%) , which measures the greenback's performance against a trade-weighted basket of six major currencies, rose to 75.957.
"Gold has been pretty heavily overbought," said Ole Hansen, senior manager for CFD and listed products at Saxo Bank.
"For the long-term bulls, this is a positive thing because it gives the market breathing space," Hansen said. "I don't think we're going to see any new highs this year. Now focus will turn to position-growing ahead of year end."
Holdings in SPDR Gold Trust (GLD 112.00, -1.75, -1.54%) , the biggest gold exchange-traded fund, fell to 1,129.97 metric tons as of Friday, down 1.52 metric tons from a day ago.
Other metals also posted losses on Monday. Silver futures fell 43 cents, or 2.3%, to $18.07 an ounce. January platinum futures dropped $18.70, or 1.3%, to $1,431 an ounce. December palladium lost $4.80, or 1.3%, to $372.05 an ounce.
March copper futures fell 4.75 cents, or 1.5%, to $3.166 a pound.
