Gold News & Info

Source: Marketwatch

San Francisco— Gold futures closed lower Thursday to mark a two-session loss of almost $12, while copper tallied a decline of nearly 9% over the same period as strength in the U.S. dollar, concerns about an economic slowdown and weakness in energy futures put pressure on the metals market.

"Softer oil plus stronger greenback equals lackluster gold," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.

"Reports of sluggish Christmas sales at many U.S. stores leaves many an analyst still on the side of concluding that a slowdown is in progress in the domestic economy and that rate hikes may not be the wisest thing to do, come the next Fed meeting," he said in e-mailed commentary.

Gold for February delivery closed down $3.60 at $626.20 an ounce on the New York Mercantile Exchange after earlier falling to $626. Those were the contract's weakest intraday and closing levels since Dec. 22.

On Wednesday, the contract fell from a one-month high set early in the day to close at a one-week low as dollar strength dulled demand for the precious metal. It's down $11.80 from Friday's closing level.

Dennis Gartman, editor of the Gartman Letter, said part of the "unseemly" liquidation of metals positions was caused by talk in the market that a European central bank had bought gold instead of selling it.

"That should be construed bullishly," he said, and "for a while it was." However, traders swiftly shifted to thinking that the bank, rumored to be the Bank of Italy, was actually informing the world of its discontent with the strong euro, said Gartman. Being tied to the single currency has prevented Italy from using currency devaluation to dig its way out of an economic morass, he said.

Concern at this display of "disdain" for the euro triggered a rush to the dollar, which has continued this morning, he said.

The dollar was last trading up 0.6% against the euro and up 0.4% against the British pound.

Meanwhile, other commodity markets were also lower with crude futures down more than 3% on warm-weather forecasts and rising U.S. petroleum-product supplies. Crude lost more than 4% of its value on Wednesday.

Copper was also lower Thursday, with the March contract falling another 4.7 cents, or 1.8%, to close at $2.602 a pound. Copper lost a full 7.7% of its value on Wednesday on concerns about a slowing economy and the contract is trading at its lowest levels since April.

In overnight trade, copper hit trading limits in Shanghai, "so all eyes will be on how much further the sell-off runs before support is found," said William Adams, metals analyst at BaseMetals.com.

"Our own reckoning of the market is that things are not as bearish as the price performance suggests and as such we are cautious of chasing copper lower," he said, in a note to clients.

"Indeed, at some stage a bounce looks likely before too long and the bounce could turn out to be quite aggressive, especially now that there is a considerable short-element in the market," he said.

Elsewhere in the metals sector, March silver rose 16.5 cents to close at $12.835 an ounce, recouping part of Wednesday's more than 26-cent loss. January platinum closed up 10 cents at $1,132.50 an ounce while March palladium rose $3.50 to end at $345.55.

On the supply side, gold warehouse stocks were unchanged at 7.53 million troy ounces as of late Wednesday, according to Nymex data. Silver supplies were unchanged at 113 million troy ounces and copper supplies were unchanged at 34,078 short tons.

In equities Thursday, Kinross Gold was among the bigger losers, with its shares down 4.1% at $10.95.

The Philadelphia Gold and Silver Index moved 1.8% lower at 134.49, while the CBOE Gold Index was at 138.96, down 2.2%, and the Amex Gold Bugs Index fell 2.1% to 317.66.

The DJ Wilshire Nonferrous Metals Index fell 0.8% to 5,652.29, the DJ Wilshire Industrial Metals Index was at 3,152.55, down 1%, and the DJ Wilshire General Mining Index fell 0.7% to 1,172.45.