US gold posts biggest weekly loss since May

Gold dipped on Friday, as disappointing US job growth failed to revive safe-haven demand following a raft of strong economic data, and bullion notched its biggest weekly decline since May.
Bullion declined for a fifth day, its longest losing streak in seven months, although it closed up from a six-week low after data showed US employers hired fewer workers than expected in December, and a surprise fall in the unemployment rate was blamed on people giving up the search for work.
The nearly 4 percent decline this week has called into question gold's lengthy bull run as traders look forward to a US economic recovery that Federal Reserve Chairman Ben Bernanke said "may be taking hold" even if growth remains too weak to put a real dent in the nation's jobless rate, although continued jitters over the eurozone have limited the decline.
"Money is moving out of bonds and gold into the broader equity market as investors are willing to take on more risks thinking that economic conditions have improved," said Brian Hicks, co-manager of Global Resources Fund of the $2.9 billion fund manager US Global Investors.
Friday's payrolls data, however, showed there are still economic challenges on the horizon, he added. Hicks said that he expects gold to rangebound near term until the market finds a new catalyst such as next Friday's US consumer prices data.
Spot gold fell 0.1 percent to $1,369.85 on ounce at 3:25 pm EST (2025 GMT), having earlier touched a low of $1,352.30 an ounce, its weakest since November 26. US gold futures for February delivery settled down $2.80 an ounce to $1,368.90. Silver dropped 1.1 percent to $28.71 an ounce.
COMEX futures volume remained noticeably higher than recent weeks as traders returned in the new year after the holiday period. Gold futures volume was 45 percent above its 30-day average, and silver was about 25 percent higher, preliminary Reuters data showed.
Gold's upward trend has weakened after prices breached below the 50-day moving average for the first time since August, but a rebound is possible if it can hold above key technical support near $1,360 an ounce. On the charts, gold has breached below two important support levels, namely its 50-day average at $1,382 an ounce and its December lows at the $1,360s, said Adam Sarhan, chief executive of New York-based Sarhan Capital.
"At this stage of the game, gold is at a very important inflection point. As long as gold holds above the $1,360s, we should be able to see a bounce," Sarhan said. Prices bounced after Friday's jobs data dimmed some of this week's optimism fuelled by a series of better-than-expected US data including purchasing managers' index, new factory orders and upbeat private-sector jobs data.
However, bullion was weighed by a rise in the US dollar to its highest in nearly four months against the euro on worries about use of eurozone peripheral country bonds as collateral. Gold fell in tandem with other commodities this week as some investors unwound solid gains made on thin volume in gold and other precious metals over the holidays. Gold rose nearly 3 percent in December, and was up 29.6 percent last year.
But many dealers remain loath to give up on the unprecedented 10-year rise in gold prices, saying they'll wait for far more evidence of a sustained recovery and stability in Europe. Strong physical demand could also lift prices after recent decline. The head of the Bombay Bullion Association told Reuters that gold imports to India, the world's largest consumer, are likely to jump 64 percent to 500-550 tonnes in 2011.
Gold-backed exchange-traded funds continued to see outflows, with holdings of the largest, New York's SPDR Gold Trust, falling to a seven-month low on Thursday. Platinum gained 0.2 percent at $1,731.74 an ounce, while palladium slipped 1.2 percent at $749.47.