Gold jumps, but set for biggest drop in 5 months
New York (Nov 29) Gold futures rose Friday, buoyed by a weaker dollar and bargain hunting, but remained on track for the biggest monthly drop since the yellow metal’s June bloodbath.
Gold for February delivery, the most active contract, gained $14.90 an ounce, or 1.2%, to trade at 1,252.60 on the New York Mercantile Exchange.
Gold futures are on track for a 6.5% November decline, according to FactSet, the largest monthly drop since a 12.5% plunge in June. Since the beginning of the year, gold is down more than 25%.
March silver futures advanced 38 cents, or 2%, to $20.07 an ounce, but are on track for a monthly fall of nearly 10%, also the largest since June.
New York traders were playing a bit of “catch up” to gains seen a day earlier when U.S. markets were closed for Thanksgiving, while “opportunistic buying” in the physical market this week also provided a modicum of support, said Andrey Kryuchenkov, London-based commodities strategist at VTB Capital, in a phone interview. Pit trading in Comex metals closes early Friday at 12:30 P.M. Eastern.
Still, the overall trend for gold remains lower, Kryuchenkov said, with a generally stronger dollar, continued shedding of gold by exchange-traded funds and global economic cues set to keep pressure on the yellow metal.
Gold has seen heavy pressure since this spring when Treasury yields began to rise in anticipation of the Federal Reserve beginning to scale back the flow of its bond purchases. Gold had rallied sharply after the collapse of the housing bubble ushered in a global financial crisis in 2007 and 2008, prompting the Federal Reserve and other major central banks to aggressively loosen monetary policy and pursue unorthodox measures to boost the economy, including quantitative easing.
Gold futures peaked above $1,900 an ounce in September 2011. Gold and other precious metals were boosted in part on fears the aggressive actions would spark a rise in inflation while debasing major paper currencies. Instead, inflation remains low, with central bankers more preoccupied by disinflation and fears of outright deflation.
Silver futures have dropped more than 8% since the beginning of the month and are down more than 34% for year to date.
Meanwhile, the ICE dollar index lost 0.2% to trade at 80.562 on Friday. A weaker dollar can lift commodities priced in the currency.
In other metals trading, January platinum rose $16.30 an ounce, or 1.2%, to $1,369 an ounce, while March palladium advanced $8, or 1.1%, to $723.95 an ounce. March high-grade copper gained 2 cents, or 0.7%, to $3.21 a pound.
