GOLD and most of the other precious metals finished lower in light holiday trading in New York today, pressured by a slightly stronger US dollar and book squaring by traders exiting positions in which they previously bought metals.
Lightly traded but nearby January gold fell $US5.50 to $US1091.50 an ounce on the Comex division of the New York Mercantile Exchange. Most-active April lost $US5.60 to $US1092.50.
“The dollar is a little stronger, and (metal weakness) is feeding off of that,” said Craig Ross, vice-president of ApexFutures.com.
KEY COMMODITY PRICES: oil, gold, base metals, livestock and wheat
Shortly before the close of the Comex gold pit, the ICE Futures US dollar index was up 0.060 point to 78.245 and earlier was even more muscular at 78.550. Investors tend to buy gold as a hedge during times of US dollar weakness and conversely sell when the US dollar firms.
Currency analysts linked the US dollar’s early gains in large part to eroding investor appetite for higher-yielding currencies, especially after European data showed bank loans to euro-zone companies fell last month. However, the US dollar pared its gain — and gold conversely trimmed its loss — on position squaring later in the session.
Currency and metals analysts alike suggested price moves often occur in thin holiday conditions even without any major news, since small orders can move markets more than usual. Many market participants are on vacation during the short work week between Christmas and New Year’s Day.
“We have some general profit-taking coming at the end of the year,” said Sterling Smith, Commodity Trading Advisor and market analyst with Country Hedging. “It looks like position squaring.”
Traders capturing profits are those who sold for a gain after previously buying at lower prices.
But while gold fell to its lowest level in a week, the market did not fall though any chart levels that might have triggered still more selling, Mr Ross explained.
At the $US1086.60 low, the February futures remained well above the December 22 low of $US1075.20 an ounce, which was in turn the lowest level since early November.
Long-time lows are closely watched by market participants since otherwise a break below them could mean an acceleration of selling from technicians who trade on the basis of chart patterns rather than news events…read more at The Australian
