Gold ends lower as stocks fizzle

Rising U.S. dollar also keeps pressure on metal, other commodities

SAN FRANCISCO (MarketWatch) — Gold futures ended lower Friday, as gains for stocks and oil futures fizzled and a rising U.S. dollar kept the metal under $1,700 an ounce. 

Gold for December delivery GC1Z -0.88%  retreated $10.20 or 0.6%, to settle at $1,685.70 an ounce on the Comex division of the New York Mercantile Exchange. 

On the week, gold lost 2.3%. 

The metal had spent Asian and European trading hours firmly in the red, but ticked higher after U.S. stocks traded higher for most of the session and other commodities also gained. A late reversal for stocks, however, brought prices down. 

The dollar index DXY +0.62%  , which tracks the performance of the greenback against a basket of other major currencies, rose to 79.369 from 79.099 in late North American trading Wednesday. 

Dollar strength is a negative for dollar-denominated commodities such as gold, as it makes them more expensive for holders of other currencies.

U.S. stocks opened lower but turned higher in minutes. Such gains thinned, however, and they ended the week saddled with a 5% weekly loss.

Gold has behaved more like a risk asset in recent sessions, failing to benefit from safe-haven fund flows as investors grow more nervous about the wider economic picture. 

Gold has maneuvered through “a potentially destructive and crushing demand for short-term U.S. dollar money markets,” but getting a boost from investors seeking an alternative to currencies, said Richard Hastings, a macro strategist with Global Hunter Securities. 

Italy sold short-term bonds on Friday only to see its yields nearly double as investors are still worried about the euro zone’s sovereign-debt crisis and its ramifications for the global economy. 

“[Gold] prices could still gap in either direction depending upon events in the euro zone and the fortunes of the U.S. dollar, which remains the safe haven of choice amid a flight to safety, quality and liquidity,” said Credit Agricole analyst Robin Bhar in a note. 

Bhar cautioned that gold prices could potentially ease back to the $1,650 per ounce level, if global markets face a liquidity squeeze that prompts further liquidation and margin selling. 

“Gold is under-performing as investors are more concerned about return of capital rather than the return on capital, a situation last seen during the great financial crisis of 2008-2009,” Bhar said. 

Other metals tracked gold lower, with silver bearing the brunt of the losses. 

December silver SI1Z -2.93%  retreated 87 cents, or 2.7%, to $31.01 an ounce. On the week, silver declined 4.3%. 

December copper HG1Z +0.03%  declined 1 cent, or 0.3%, to $3.27 a pound. Copper had traded most of the session in the black. The reversal brought copper’s weekly losses to 3.8%. 

January platinum PL2F -1.84%  lost $25.50, or 1.6%, to $1,533.10 an ounce. Platinum declined 3.5% on the week. 

December palladium PA1Z -4.16%  declined $19.75, or 3.4%, to $570.10 an ounce. Palladium lost 5.8% on the week. 

Source; http://www.marketwatch.com/story/gold-nudges-lower-in-cautious-trade-2011-11-24