Weak jobs-growth data spur retreat in the U.S. dollar; silver, copper eyed
By Myra P. Saefong & Polya Lesova, MarketWatch
Last Update: 4:13 PM ET May 4, 2007
SAN FRANCISCO (MarketWatch) -- Gold futures closed near $690 an ounce Friday to mark their strongest finish in nearly two weeks as the U.S. dollar fell against major currencies in the wake of data that showed the smallest increase in payroll employment since November 2004.
"The U.S. dollar's weakness remains the focal point," said Peter Spina, an analyst at GoldSeek.com, in e-mailed comments. "Gold will push up against the $700 resistance and either see another rally fizzle or see a large wave of momentum kick in and take this market much higher." For now, "the market remains firm on pullbacks, so the inevitable break of $700 is just a question of when," he said.
Gold for June delivery gained $5.30 to close at $689.70 an ounce on the New York Mercantile Exchange, its highest closing level since April 23. On Thursday, gold futures gained $9.30, the benchmark contract is up $7.90, or 1.2%, for the week.
"Look for continued strength as the day wears on, but keep a keen eye on next week as all market participants will be back in full force and as the Fed watching gets under way," said Jon Nadler, analyst at Kitco Bullion Dealers. The Federal Reserve will meet Wednesday.
"A test, if it comes, of the $695 area [for gold] may succeed this time around," said Nadler, in e-mailed commentary.
Neal Ryan, director of economic research at Blanchard, pointed out that "investment demand is still increasing in each successive quarter while producers are ramping up de-hedging and mine supply is continuing to slump."
So "while we haven't yet achieved the $700 level, each pull back we've experienced in the last two months has created a higher floor price," he said in e-mailed comments. "Now it's time to make the higher highs."
Dollar move
The dollar's weakness contributed to gold's latest rise. The greenback edged lower after the Labor Department said that non-farm payrolls expanded by 88,000 in April, less than the 100,000 expected by economists surveyed by MarketWatch.
The euro was last up 0.3%, while the dollar was down 0.2% vs. the yen.
"Earlier speculation that U.S. jobs growth may reveal the weakest number in some 24 months, became a stark reality," said Nadler. "This news further undercut the dollar and extended expectations that next week's Fed meeting will result in (at least) a continuation of the thus far neutral stance on dollar rates that it had to adopt due to the conundrum posed by rising inflation and sluggish growth (in certain sectors of the economy)."
So "gold once more became a bet to the long side for funds (if not quite yet for the individual investor who may seek a validation of above $695 to join the party)," he said. "Spot bullion rose by $4.50 as soon as the news hit the wires."
Platinum and palladium moved higher along with gold. July platinum rose 1.4%, or $18, to close at $1,328.80 an ounce -- up 2.8% for the week. June palladium added 50 cents to end at $377 an ounce, up 0.7% for the week.
