MW: Gold falls on dollar; poised for 2nd weekly loss
NEW YORK (MarketWatch) -- Gold futures erased earlier gains, falling slightly Friday as better-than-expected retail data pushed up the U.S. dollar, curbing gold's investment appeal.
Gold for December delivery fell $2.90, or 0.3%, at $1,122.80 an ounce on the Comex division of the New York Mercantile Exchange. The contract is set to decline about 4% this week.
The more actively traded February contract also fell, trading $2.10, or 0.2%, lower at $1,124.10 an ounce.
"Gold can work higher, but it really has its work cut out for it in the near term," said Charles Nedoss, a senior market strategist at Olympus Futures. The February contract could test the $1,100 mark if it doesn't hold at the $1,120 level, he added.
Gold futures were up more than $10 earlier in the session, but they erased gains in recent trading as the dollar reversed its losses after U.S. retail sales data.
U.S. retail sales rose a better-than-expected 1.3% in November, the third increase in the past four months, the Commerce Department estimated Friday.
The sales gains were widespread across most kinds of retail outlets, including autos, gasoline, department stores and hardware stores.
The U.S. dollar turned higher on the report, with the dollar index (DXY 76.47, +0.42, +0.56%) up 0.5% at 76.394.
The "gold rally is muted as buyers are only bargain hunting on Friday," said George Gero, a precious-metals trader for RBC Capital Markets.
He said gold needs to stabilize, holding to a $1,125 to $1,130-an-ounce range for a few days, in order for funds and momentum traders to resume buying.
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After its robust gains in November - rising in all but two sessions in the month - gold prices have declined more than 3% this month.
The December contract lost nearly $100, or 8%, in a losing streak that began last Friday and spanned four sessions -- the longest losing streak in six weeks.
Analysts at Credit Suisse said that overall, precious metals prices could have a year-end rally, given "positive seasonal effects and still-low government bond yields."
Even so, "it is questionable whether we will reach new highs before the end of the year," they said in a note to clients issued Friday.
Holdings in SPDR Gold Trust (GLD 109.48, -1.34, -1.21%) , the biggest gold exchange-traded fund, stood at 1,116.25 metric tons as of Thursday, the lowest level in more than three weeks.
In China, the government reported that its industrial production accelerated in November to its fastest rate this year.
Industrial output surged 19.2% from the year-ago period, led again by heavy industries such as automobiles and nonferrous metals. See China's industrial production.
The data helped lift Asian and European stocks. U.S. stocks also moved higher.
In other metals Friday, March silver rose 0.9% to $17.362 an ounce, January platinum gained 0.2% to $1,427.70, and March palladium added 0.8% to $368.05 an ounce.
