Gold News & Info

Source: MarketWatch

New York— Gold futures fell early Friday, dragging other metals with them and surrendering most of the gain of more than $14 an ounce registered in the previous session amid renewed strong investment and physical demand for the metal.

Gold for April delivery was last trading down $12.30, or 2.2%, at $556 an ounce on the New York Mercantile Exchange.

On Thursday, the benchmark contract added 2.6% in a recovery from several sessions of steep declines, which traders described as a normal consolidation after the metal recently set a string of quarter-century highs prices.

"Since bottoming in 2001, gold has seen a two-steps-up, one-step-back rise, and Monday's big drop is nothing more than the start of the one-step-back part," said Peter Grandich, editor of the Grandich Letter.

"While the correction should test at least the $535-$540 area and, if broken, as low as $510-$525, such a move is not to be construed as the end of the bull run, he said, adding that a rally to $600 "remains a question of when, not if, for 2006."

Action Economics said a strong yen was also weighing on the metal. The yen rallied on strong Japanese data overnight, squeezing out some yen-funded margin long positions in gold. Volumes in Asia and Europe were lower than normal after what has been a volatile week for the metals market.

Still, longer-term fundamentals — rising global demand and generally constrained supply — "remain bullish for bullion prices," said the research firm.

Also on the move in metals, copper was down 6.70 cents, or 2.9%, at $2.238 a pound.

Earlier, Prudential lowered its rating on the copper industry to neutral from favorable, citing prospects for weaker-than-expected demand.

Analyst John Tumazos cut his global copper consumption forecast for 2006 to 4% from a previous 5.2%, "as housing starts and vehicle production in the U.S. are expected to have negative-to-flat year-over-year comparisons and demand in South Korea and Taiwan is weak."

Tumazos is sticking with his copper price forecast of $2.00 per pound.

Meanwhile, silver futures were last trading down 34 cents at $9.32 an ounce. Platinum was down $12.70 at $1,061 an ounce, while sister metal palladium lost $17.45 to $287 an ounce.

On the supply side, copper inventories were down 658 short tons at 44,911 short tons as of late Thursday, according to Nymex.

Gold supplies were up 10,330 troy ounces at 7.39 million. Silver stocks were unchanged at 125.5 million troy ounces.