News // Metal market
Gold Falls Toward Three Week Low
14 November 2008 , 13:40873
Gold slipped on Friday after posting its largest daily percentage gain in more than a week the previous day, as the U.S. dollar turned higher against the euro and spurred selling.
But firmer oil and equities could offer support around the three-week low of around $700 an ounce struck on Thursday. Also aiding prices, dealers said they expected steady physical buying from India, the world's main gold consumer, during the wedding season which lasts until early next year.
Gold was trading at $729.00 an ounce, down $5.75 from New York's notional close. Gold fell to $700.25 on Thursday before bouncing to a high of $736.75 on gains in equities.
"We can continue to expect volatility for some time to come. I think the U.S. dollar very much is the driver still," said Darren Heathcote of Investec Australia in Sydney.
The euro slipped to $2.773 after rising in New York as strong performance on Wall Street helped ease extreme risk aversion.
Japan's Nikkei average rose 4.3 percent on Friday after U.S. shares rallied the previous day on bargain-hunting.
Gold, which hit an intraday high of $736 on Friday, has laboured to sustain the uptrend since hitting a two-month high of $931 in early October. It fell to an 11-month of $860.80 three weeks ago, partly due to losses in equities that forced investors to cash in to cover losses.
"Despite gold's latest weakness and the possibility of further breakdown, I believe we arenearing a turning point in the tenor and direction of the market," said Jeffrey Nichols, head of American Precious Metals Advisors.
"Before long, gold will begin a new and sustainable upward march.Until then, with the yellow metal in the $700 to $730 range, and certainly at lower price levels, price-sensitive demand from key Asian and Middle Eastern markets should stabilise the market."
Demand for gold jewellery has picked up in India despite a weakening rupee during the wedding season, when parents give gold to their daughters for financial security.
Despite buying from India, gold remained at the mercy of the dollar's movements, said dealers.
"As we've seen $700 level already, there's nothing to say we will get there again at this point. It's just really that the dollar will be the deciding factor," said Heathcote of Investec Australia.
Oil was steady around $58 a barrel, having jumped almost 4 percent in previous session due to a rebound in equity markets.
Platinum was trading at $838.00 ounce, up $16.50 from New York's notional close on Thursday.
New York gold futures rose $23.9 an ounce to $728.9.
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