Gold futures slip, tally a minor weekly loss
San Francisco (May 23) Gold futures settled lower Friday on the back of better-than-expected data on new U.S. home sales and strength in U.S. equities, prompting prices to tally a mild loss for the week.
Gold for June delivery /quotes/zigman/698029/realtime GCM4 -0.15% pulled back by $3.30, or 0.3%, to settle at $1,291.70 an ounce on the Comex division of the New York Mercantile Exchange, for a modest decline of 0.1% on the week.
“Bottom line, the gold market is ‘stuck’ at the $1,300 level and until we see a material shift in market dynamics such as a correction in stocks, or some sort of surprise from the Fed, that is set to continue as gold is trading in a trendless range,” he said.
Other analysts pointed out the significance of gold’s narrow trading range this week.
“The steady sideways movement of the gold price has now continued for over a month in such a tight range that its subsequent move will be very strong, more than a simple short-term wave,” said Julian Phillips, founder of and contributor to GoldForecaster.com. “Gold investors should be cautious.”
London gold fix
In the news Friday, the U.K.’s Financial Conduct Authority on Friday fined Barclays 26 million pounds ($43.9 million) after one of its traders allegedly manipulated the London gold fix global price benchmark.
The regular said Barclays trader Daniel Plunkett took advantage of weaknesses in the banks’ systems in June 2012 to try to influence the gold fix, which is used by jewelers and miners and other to price their deals.
“The Barclays incident is likely just the tip of the iceberg in respect of today’s gold market,” said Brien Lundin, editor of Gold Newsletter.
“When paper derivatives of a commodity are traded in such magnitude that their notional supply is a massive multiple of the real-world supply, then the price of that commodity can be manipulated by anyone with enough money or knowledge,” he said. “That’s what has been happening with gold, as the ‘paper gold’ market in the West places a price on the metal that is far lower than Eastern buyers judge to be fair value.”
