MW: Gold, other metals fall as U.S. dollar rallies
Trading expected to remain thin because of Thanksgiving holiday
By Polya Lesova, MarketWatch
LONDON (MarketWatch) — Gold and other metals futures posted losses on Friday, as investors sold commodities and stocks and bought the U.S. dollar following renewed concerns over debt levels in the euro zone.
Gold for December delivery (GCZ10 1,362, -11.30, -0.82%) dropped $13.30 to $1,359.70 an ounce in electronic trading on Globex.
The contract earlier hit an intraday low of $1,357.20 an ounce.
U.S. markets were closed on Thursday for the Thanksgiving holiday and volumes are expected to remain thin on Friday during a shortened trading session.
“Extended Thanksgiving holidays will likely keep trade thin and the [metals] complex remains vulnerable to further pressure as traders look to lock in profits and maintain cash positions to cover margin requirements,” said James Moore, London-based analyst at Fast Markets, in a note.
Also pressuring gold prices was a rally in the U.S. dollar.
“The main negative factor is the firm U.S. dollar, which has risen to its highest level in two months versus the euro,” wrote analysts at Commerzbank in a note to clients. “Furthermore, the increase in the margins for gold futures trading on the Shanghai Futures Exchange is also having an adverse effect.”
The euro slumped 0.9% to $1.3219, as worries escalated over sovereign-debt levels in the euro zone, with officials from Portugal and Spain rushing to deny reports that their countries may need financial aid in order to rein in ballooning deficits. Read more on Spain and Portugal.
The dollar index (DXY 80.38, +0.51, +0.64%) , which tracks the performance of the greenback against a basket of other major currencies, rose 0.7% to 80.420.
Dollar strength tends to pressure dollar-denominated commodity prices because it makes those commodities more expensive for holders of other currencies.
Other metals futures also dropped sharply.
Silver for December delivery fell 89 cents, or 3.2%, to $26.64 an ounce in electronic trade.
Palladium futures slumped over 4% to $666.90 an ounce. Copper futures dropped 4 cents to $3.71 a pound.
European equity markets fell sharply in intraday trading and futures on the Dow Jones Industrial Average (DJZ10 11,085, -70.00, -0.63%) slumped nearly 100 points, pointing to sharp opening losses for Wall Street.
