Gold News & Info

Source: Marketwatch

San Francisco— Gold futures dropped as much as $11 an ounce Thursday to trade at their lowest level in two weeks as a rebound in the U.S. dollar, weakness in oil prices and the recent climb in the broader U.S. stock market to a record level eased investment demand for the precious metal.

"Gold is being pushed down by momentum funds moving money to paper equities," said Ned Schmidt, editor of the Value View Gold Report. "Fear of missing a rally in paper assets is rampant."

Gold for June delivery was last down $10.50, or 1.5%, at $676.90 an ounce on the New York Mercantile Exchange. It touched $675.80 earlier, the contract's weakest level since April 12. On Wednesday, gold futures dropped 30 cents to close at $687.40 an ounce.

"Traders liquidated positions on perceptions that falling oil and even a mildly rising dollar were good enough of an excuse to test the downside in the metal," said Jon Nadler, analyst at Kitco Bullion Dealers, in emailed comments.

The dollar gained across the board Thursday. The euro was last down 0.3%, while the dollar was up 0.6% vs. the yen.

But on Wednesday, the dollar had traded within striking distance of its record low against the euro of $1.3666, after economic reports boosted speculation that the interest-rate differential between the United States and the eurozone will continue to narrow.

The "dollar broke to a new cycle low yesterday, which means gold is ultimately going higher," said Schmidt, in e-mailed comments..

And Friday's report on U.S. GDP will "likely show that U.S. recession imminent, which will make the U.S. dollar a sale," he said.

So "buy gold on this price weakness," he said.

Elsewhere in commodities trading Thursday, crude-oil futures declined after Iran said it was approaching a "united view" with the European Union on resolving tensions around the Mideast country's nuclear program.

The current period of consolidation in gold has been healthy, "taking some of the heat out of the market," said James Moore, metals analyst at TheBullionDesk.com, in a note to clients.

U.S. stocks were mixed on Thursday, as investors consolidated gains in the wake of a rally that propelled the Dow Jones Industrial Average above 13,000.

Meanwhile, "we won't know until Tuesday what the [central bank] sales levels have been for this past week, but we still believe that there is a significant tonnage of sales hitting the market this week, putting considerable pressure on the [gold] price," Neal Ryan, director of economic research at Blanchard said in e-mailed commentary.

Ryan said that his company recommends a long-term trading strategy for metals investments rather than a day-trading strategy.

"The key to participating in this market is to take a position, buy on market weakness and have a long term outlook of three to five years," Ryan said. "The only time you're going to hear from us that we're bearish on the price is when we think the run is through….sometime in 2012 or further."

Other metals prices also posted sharp losses Thursday. May silver fell 2.3%, or 31 cents, to $13.455 an ounce. July platinum declined $13.20 to 1,304 an ounce, June palladium fell $6.05 to $377 an ounce and May copper dropped 3.5%, or 12.6 cents, to $3.46 a pound.

"Silver is the orphan market at the moment," said Schmidt. It's a "screaming buy" that's "building base for a new high."

On the supply side, gold warehouse stocks were unchanged at 7.68 million troy ounces as of late Wednesday, according to Nymex data. Silver supplies were unchanged at 129.4 million troy ounces, while copper supplies fell by 147 short tons to 34,793 short tons.

Among individual companies, Newmont Mining Corp. said Thursday that while its first-quarter profit fell sharply, weighed down by higher costs and adverse foreign exchange effects, total revenue increased with sales gains for both gold and copper.

The Denver gold-mining company said net income for the latest quarter dropped to $68 million, or 15 cents a share, from $209 million, or 47 cents a share, a year earlier.

"Newmont posted much worse earnings numbers than analysts had expected and reiterated their expectations of lower production figures throughout the year," Ryan said.

Indexes tracking the performance of stocks in the metals and mining sector fell Thursday. The Amex Gold Bugs Index fell 2.4% to 342.81 points, the CBOE Gold Index fell 2% to 146.12 points and the Philadelphia Gold and Silver Index was down 2.3% at 139.35 points.

As for sector ETFs, the StreetTracks Gold Trust ETF fell 1.8% to $66.68, the iShares Silver Trust ETF dropped 2.8% to $133.58 and the Market Vectors-Gold Miners ETF fell 2.2% to $40.11.