Gold futures in New York settled up a three-week high on Friday as investors shifted into US dollar alternatives on the heels of a weaker-than-expected US payrolls report for May. In silver, end-of-week profit taking reigned and an eight-day rally dried up, leaving the metal to consolidate near on Thursday's 2-1/2-month peak.
Gold failed get a foothold above nearby resistance, as the atmosphere cooled off a bit after on Thursday's short-covering spree that ignited a rally above the $420 an ounce mark.
"The (trading) ring is more than willing to keep a lid on this market because they just think after it moved too fast in one day on the upside," said a New York desk trader. August gold on the Comex division of the New York Mercantile Exchange gained $1.00 to end at $425.80 an ounce, its highest close since May 11, after trading $423.80 to $427.
The market seemed calm after yesterday's 1.7 percent jump a big move for gold prices when a huge reduction in short positions in futures dropped open interest 10,433 contracts to 254,084 lots. "I think investors are temporarily frozen in their positions" and watching the direction of the euro, said the trader.
"But we are building a base here." Resistance was put at $427 with support at $416-418, he added.
"The yellow metal's current dependency on the currencies will continue to keep it at the beck and call of the euro/dollar over the coming sessions.
Meanwhile, scaled down physical buying will continue to provide support," London analysts at TheBullionDesk.com said in an afternoon note. US employers added only 78,000 workers to their payrolls last month, far fewer than expected.
The unemployment rate edged down to its lowest level since September 2001. It was the weakest month for confirm job growth since August 2003, and wells below Wall Street expectations for 185,000 new jobs.
It also marked a sharp slowdown in job creation after a 274,000-job surge in April. The euro rose to a high around $1.2343, from about $1.2290 before the report, in an initial knee-jerk reaction, before sliding to $1.2213.
Political uncertainty in Europe after the French and Dutch voted against referendums to support the EU constitution also continued to pressure the euro. But, some gold players were saying gold had decoupled from the euro.
"After three years of disdain for the dollar in favour or the 'new' euro, then a cooling in the relationship, gold is telling us perhaps that disdain has spread to other currencies, especially the alleged alternative to the US dollar," commented one broker at a futures commission merchant.
Final estimated Comex gold volume was 60,000 contracts, way below the previous final count of 99,227 lots. Spot gold last went for $423.40/4.10 an ounce, compared with $422.25/3.00 previously. On Friday's London afternoon fix was at $423.55.
July silver fell 3.5 cents to $7.51 an ounce, traded $7.49-$7.615 and far from yesterday's high at $7.63. Spot silver fetched $7.45/48, against $7.50/53 previously. The day's fix was at $7.53. "Support is expected back at $7.40/50 while resistance should be seen at $7.65/80 with $8 still within reach if the funds continue to buy on speculation of a silver ETF (exchange-traded fund)," said TheBullionDesk.com.
July platinum shed $1 to $875.50 an ounce. Spot platinum fetched $873/877. September palladium rose $2.15 cents to $186.40 an ounce. Spot reached $183/187.
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