Investing.com - Gold futures fell to the lowest level since
mid-August early Friday, before trimming losses following the
release of tepid U.S. non-farm payrolls data, which suggested the
Federal Reserve will continue its quantitative easing program in
the near term.
On the Comex division of the New York Mercantile Exchange, gold
futures for February delivery dropped 1.1% on Friday to settle the
week at USD1,655.85 a troy ounce.
Gold prices fell to USD1,626.05 earlier in the session, the lowest
since August 21, after the minutes from the Federal Reserve Open
Market Committee's December meeting published late Thursday
indicated that the central bank could end its bond-buying program
earlier than expected.
Moves in the gold price over the past year have largely tracked
shifting expectations as to whether the U.S. central bank would
pump more money into the financial system.
Futures prices ended the holiday-shortened week with a modest 0.3%
loss, the sixth consecutive weekly decline.
Gold prices were likely to find support at USD1,626.05 a troy
ounce, Friday's low and a 19-week low and resistance at
USD1,690.55, Thursday's high.
Gold prices fell sharply after the minutes from the Fed's most
recent policy-setting meeting showed several Fed officials thought
the central bank would be able to slow or stop its bond purchases
well before December 2013.
The Fed's quantitative easing program is viewed by many investors
as a major source of liquidity that weakens the U.S. dollar and
helps support prices of commodities and other hard assets,
But futures recovered from the lows after the U.S. Department of
Labor said the economy added 155,000 jobs in December, easing from
an upwardly revised increase of 161,000 in November.
The unemployment rate held steady at 7.8%, suggesting that the
recovery in the labor market may be slowing.
The still-high unemployment rate will keep the Fed's asset-purchase
program in place for the indefinite future. The Fed's December
minutes said monetary policy will remain accommodative "at least as
long" as the jobless rate remains above 6.5%.
The U.S. dollar moderated strong gains following the release of the
lackluster U.S. employment data.
The dollar index, which tracks the performance of the greenback
against a basket of six other major currencies, retreated from the
session high of 80.99 to settle the week at 80.61.
Gold prices often move inversely to the U.S. dollar, as gold
becomes less expensive for buyers using other currencies.
In the week ahead, investors are likely to remain focused on U.S.
political wrangling over fiscal policy.
U.S. lawmakers passed a compromise bill to avoid the fiscal cliff
last week, however investors remained jittery over the longer term
outlook, with negotiations on raising the U.S. debt ceiling still
to come in February.
Market participants will also be anticipating monetary policy
decisions by the European Central Bank and the Bank of England.
Elsewhere on the Comex, silver for March delivery fell 1.6% on
Friday to settle the week at USD30.22 a troy ounce. Despite
Friday's losses, silver futures added 0.5% on the week.
Meanwhile, copper for March delivery declined 0.5% Friday to close
the week at USD3.700 a pound. Copper prices climbed 3% on the week.
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