US gold turns to end higher

US gold futures erased losses to finish higher on Friday as the dollar's rise following a strong jobs report stalled, and robust buying by physical buyers could support the precious metal in the near term, dealers said.
The move by gold producer Newmont Mining Corp to eliminate its entire 1.85 million-ounce gold hedge position was seen as a bullish sign among market-watchers as it encouraged other miners to also buy back their hedge positions.
Most-active gold for August delivery on the Comex division of the New York Mercantile Exchange settled up $4.20 at $654.80 an ounce, dealing between $646.70 and $668.50. Andy Montana, a director at bullion dealer ScotiaMocatta said that gold fell on a stronger dollar against the euro after a better-than-expected US employment report in June.
"The job report came out and certainly it was positive for the US economy," Montana said. US employers added a solid 132,000 new jobs in June and boosted payrolls more strongly than previously thought in April and May. The June hiring figure topped forecasts for 120,000 jobs made by Wall Street economists surveyed by Reuters.
The dollar initially rallied after the report, but quickly gave up its gains, hitting a 30-year low against the Canadian dollar and approaching a record low against the euro.
A large US bank and a central bank stepped in to buy euros, snuffing out a fleeting dollar rally after the data, traders said. A weaker greenback makes gold, which is denominated in US dollars, more attractive for holders of other currencies.
Monotone said that he saw fairly good physical buying in bullion even though demand has slowed in the summer months. Comex estimated final volume at 86,227 lots, and gold options at 7,039.
Turnover at Chicago Board of Trade's electronic 100-oz gold futures was 24,798 lots at 3:01 pm. On Thursday, Denver-based Newmont, the world's second-biggest producer after Canada's Barrack Gold Co, said it would get rid of all its hedge positions and was mulling a possible sale or public offering of its merchant banking business.
Newmont shares rallied 6 percent on Friday on the news. "I think that the buyback that we have seen in the marketplace have certainly had an overall benefit to the price," said Montana. He said that the producers' buyback would help to absorb strong selling by central banks, which he expected to continue. UBS Investment Bank said in a note to clients that Newmont's moves would ratchet up the pressure on other gold miners with outstanding, and in some cases, much larger hedge books.
"Newmont's move is another clear indication that mining companies remain ideologically against hedging and that aggregate producer de-hedging will likely continue," UBS said. Spot gold was at $653.80/$654.60, compared with $649.30/$650.10 late trade on Thursday. The London afternoon gold fix was set at $648.75.
The silver market was supported by the news about Mexican miners' labour actions in protest over safety conditions and a long-running power struggle in the union. Mexico's mines and metals plants were working normally on Friday, the union said, after a 24-hour strike affected operation owned by metals major's Penniless and Group Mexico.
Comex September silver closed up 17.70 cents, or 1.4 percent, at $12.757 an ounce, trading between $12.420 and $12.865. Spot silver was quoted at $12.68/12.73, which was higher than the late on Thursday quote of $12.48/12.53. London silver was fixed at $12.400. Nymex October platinum ended up $7.30 at $1,311.10 an ounce. Spot platinum traded at $1,290/1,297. September palladium gained $3.70, or 1 percent, to close at $368.95 an ounce. Spot palladium fetched $359.50/363.50.