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SAN FRANCISCO (AFX) — Gold futures closed near 458 usd an ounce Friday to mark a 16-year high and a more than 1 pct gain for the week, fueled by the dollar’s decline to a record low against the euro and by reports of explosions in Madrid in the last half hour of trading. «Gold was struggling on either side of unchanged when news hit of the bombings in Spain,» said Peter Grandich, editor of the Grandich Letter. Traders «who sold the market short right after the pop off the unemployment numbers scrambled to cover in the last hour of trading,» he said. «A new high on the euro didn’t hurt.» At least four explosions were reported in Madrid Friday after a Basque newspaper said it had received a telephoned bomb threat from the Basque separatist group ETA, according to news reports. Also Friday, the US Labor Department estimated that nonfarm payrolls increased a less-than-expected 112,000 in November, while the unemployment rate dipped to 5.4 pct. The news drove the euro to a record high against the dollar. Against this backdrop, gold for February delivery closed at 457.80 usd an ounce on the New York Mercantile Exchange, up 5.50, after an earlier fall to a low of 450 usd. ` Prices have not closed this high since June 1988, according to weekly charts. The contract settled 6.30 usd above its closing level on Nov 24, before the Thanksgiving holiday. «The euro has run up to the level where central bankers may take some action,» said Ned Schmidt, editor of the Value View Gold Report. «Verbal threats may be all that occurs, but that risk is now high.» On the other hand, the «year-end is rapidly approaching [and] fund managers will want to book some of their profits on gold,» he said. Overall, he expects December will be marked by profit-taking in gold. Looking further ahead, Grandich believes the Bank of Japan (BoJ) may intervene in the currency market «as most of their manufacturers have not hedged themselves currency-wise for the next quarter.» The key level for those manufacturers is 100 yen, he said. «Breaking that would cause them to sell US dollars hard, something the BoJ doesn’t want to see,» he said. Elsewhere in metals futures market, March silver tacked on 8.3 cents to close at 8.043 usd an ounce, after falling 1.5 pct in the previous session. It is above last Wednesday’s close of 7.667 usd. March copper closed up 1.65 cents at 1.3915 usd a pound, below the pre-holiday level of 1.4315. The January platinum contract fell 9.40 usd to end the day at 874.80 usd an ounce, above last Wednesday’s 862.40 closing level. March palladium closed at 206.75 usd an ounce, down 2.30 for the session and down almost 10 usd from the pre-Thanksgiving session. Tracking inventories, copper supplies were down 517 short tons at 41,453 short tons as of late Thursday, according to the Nymex. Silver stocks were unchanged at 102.8 mln troy ounces, while gold inventories stood at 5.39 mln troy ounces, up 15,600 troy ounces from the previous session. Meanwhile, key indexes for the metals mining sector closed on a mixed note Friday, but were lower for the week. «Gold stocks have failed to participate fully and adequately in the recent gold rally,» said Value View Gold’s Schmidt. «Gold stocks are likely to be weaker than gold until into January,» he said, adding that «little reason exists to buy gold stocks, and with gold becoming weaker during the month, they will likely continue to be a disappointment.» The CBOE Gold Index closed at 93.39, down 0.1 pct for the day, and down 6.2 pct for the week. The Philadelphia Gold and Silver Index rose 0.6 pct to close at 103.85, but was still down 5.5 pct from the week-ago close. Shares of South African miner Durban Deep were among the biggest percentage gainers Friday, up 3.2 pct. The Amex Gold Bugs Index closed at 227.24, up 0.2 pct for the session, with shares of Kinross Gold up 3.8 pct. For the week, however, the index lost 6.6 pct. In other metals news Friday, shares of Alcoa Inc and Alcan Inc closed lower after UBS Investment Research downgraded both aluminum producers to «neutral» on concern about valuation, raw materials costs and unfavorable foreign currency translation.
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