US gold futures finished at their lowest mark since February on Friday, slammed by fund selling as the dollar shot to seven-month highs against the euro, which made bullion less attractive to investors. June delivery gold on the New York Mercantile Exchange's Comex division was down $3.10 at $417.70 an ounce its weakest close since February 9 after dealing between $421.10 and $416.80. Futures extended losses sustained on dollar strength after June gold broke down below $418.50 an ounce, triggering stop-loss sell orders by speculators and dealers.
"The funds are going short and liquidating long positions because the dollar is very strong," said Leonard Kaplan, president of Prospector Asset Management. The dollar rallied to fresh highs for this year against major European currencies, with its resilience in the face of potentially damaging developments this week finally triggering a technical breakout.
Aiding the greenback is a growing certainty that US interest rates will remain on their upward course, widening the gap with lower European rates. Political and economic concerns in Europe are also weighing on the euro.
New York, the euro was at $1.2550 and at its lowest levels since late October. A strong US currency makes dollar-denominated commodities costlier for traders overseas. Analysts said gold could fall further if the dollar extends gains and speculative players unload more of their holdings.
But cheaper prices could also prompt some bargain hunting. "Certainly, if we were to take out the February low (at $414 in June gold), that would portend more downward pressure," said David Rinehimer, head of commodities research at Citicorp Global Markets.
"But lower prices should stimulate demand. I think we will hold above $400 in gold." Support on the charts was seen in Comex June gold at $414, $412 and $410, with resistance up at $421. Spot gold last fetched $417.40/8.15 an ounce, way below on Thursday's New York close at $420.30/1.00. London's afternoon fix on Friday was $418.
Major mining indexes also fell, with Philadelphia Gold/Silver down 1.2 percent at 80.70 and non-hedging producers on the Amex Gold Bugs off 0.8 percent at 171.32. A South African court has ruled that Harmony Gold Mining Co Ltd's $4.3 billion hostile bid for Gold Fields Ltd expired five months ago, leaving Harmony with 11.5 percent of its rival.
Both firms and investors expressed irritation that the battle, which cost over $50 million, had been pointless since December, but Harmony said it now wanted to hammer out a fresh deal with the stake.
July silver fell 18.5 cents to $6.955 an ounce, moving from $7.16 to $6.945. Spot reached $6.92/95 vs. $7.09/12 previously. The fix was $7.10. Key support was sighted at $6.80 and then at $6.50 with resistance pegged at $7.20. On the board at Nymex, July platinum shed $4.90 to $862.50 an ounce. Spot platinum priced at $860/865. June palladium lost $1.05 to end at $187.85 an ounce. Spot edged to $186/190.
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