Gold Slips as Dollar Strengthens

“The second consecutive strong jobs report only briefly blunted the gold rally as renewed euro strength and U.S. dollar weakness has driven further short covering in gold”, said Tai Wong, director of base and precious metals trading for BMO Capital Markets in NY, adding this was despite the fact that a December rate rise was now more or less guaranteed.

The metal gained US$24 on Friday, taking gold to its highest level in three weeks.

It will be interesting how Gold trades next week, and for the remainder of the year; but it and numerous industrial metals look like longer term buys at these prices from an investment standpoint.

Spot gold XAU= was little changed at $1,071.52 an ounce by 0009 GMT.

Gold futures with February delivery dates on the Comex market in NY hit a high of $1,088.85 early with contracts worth more than 19 million ounces exchanging hands, nearly double usual volumes.

Gold rose on Tuesday as the dollar receded slightly and European shares fell, though expectations that the U.S. Federal Reserve will raise interest rates next week kept the upside in check.

There are risks of large fund outflows if prices trade closer to $1,000, Barclays said on Monday.

Atlanta Federal Reserve President Dennis Lockhart said the conditions for a rate rise are very satisfactory and that the USA economy is on a solid, moderate growth path. The Bloomberg Dollar Spot Index headed for the biggest gain in a month.

“Plunging commodity prices and a stronger dollar set the stage for a retreat in gold prices”, HSBC analyst James Steel said.

“For gold now it’s just a wait and see game”. Palladium fell 1 percent while platinum added 0.4 percent.

Gold prices still rallied on Friday as the underemployment rate crept higher, supporting the view expressed by Fed Chair Janet Yellen that the pace of tightening will be slow.

Latest data gathered by U.S. regulator the CFTC put the net positioning of “managed money” traders at a negative record for the 10-year series as of last Tuesday, with bearish bets amongst hedge funds and other speculative players outweighing their bullish bets by more than 55 notional tonnes.

Among other precious metals, silver was up 0.1% at $14.23 an ounce, having dropped by 2% in the previous session.

Gold had touched a five-year low of $1,046.44 on Thursday and is heading for a third annual loss, the longest slump since 2000.