A drop in the dollar and the week-long dispute between Iran and Britain drove gold prices to a higher finish on Friday, as investors added to their long positions ahead of the weekend.
Gold rose as high as $667.90 an ounce before easing to $664.30/665.30 by 3:17 p.m. (1917 GMT), against $661.20/661.70 in New York late on Thursday, when it fell 1.7% at one point. Most-active gold futures for June delivery on the Comex division of the New York Mercantile Exchange settled up $1.40 at $669 an ounce, traded from $666.50 to $673.80. Emanuel Balarie, senior market strategist at Wisdom Financial, said gold climbed on Friday largely due to the dollar's broad decline after the US government said it would impose duties on imports of coated paper from China. „Right now, in my opinion, I think the upward momentum for gold looks really bullish. The main factors, of course, are the dollar, continued tensions with Iran, and potentially some fund buying coming back in,” Balarie said. The dollar turned lower after it accelerated gains against the euro and yen in early morning trade as a key US manufacturing survey for March showed business activity was much higher than expected.
But Oil prices stalled on Friday after a nearly two-week rally on tensions between Iran and the West and worries over US gasoline supplies ahead of summer driving season. US crude futures ended 16 cents lower at $65.87 a barrel. Leonard Kaplan, president of Prospector Asset Management, said that negative factors for gold, such as lower oil prices, were far overshadowed by the heightened geopolitical pressure. „Nobody wants to be short in front of the weekend in case something happens. It's just getting worse and worse there,” Kaplan said. A week after Iran detained 15 British sailors and marines in the Gulf, Britain was still trying to secure their release. It planned to urge the European Union to help isolate Iran at a meeting of EU ministers starting on Friday.
Gold is often seen as a hedge against oil-led inflation and generally moves in the opposite direction of the dollar. Bernard Hunter, director of precious metals marketing at ScotiaMocatta, said that many drivers to gold, such as the week-long standoff between Iran and Britain, were already factored into the price. „With the weekend coming up, people are just holding their positions. I don't think anyone wants to go to this weekend short. The risk is certainly on the upside,” Hunter said. Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Germany's Heraeus, said he expected the market to quiet down in the next few days, with volatility to pick up again only in the second half of April, because of the upcoming Easter holidays. Wrzesniok-Rossbach said he expected gold to stay in a range between $650 and $680 an ounce in the short run. (reuters.com)