Business | Markets
Gold recovers from low as dollar retreats
Gold recovered from a four-month low on Friday as the dollar retreated from the day's highs, with analysts expecting future volatility to be driven by gyrations in the greenback and possible fund sales.
- Reuters
- Published: 00:05 May 3, 2008
London: Gold recovered from a four-month low on Friday as the dollar retreated from the day's highs, with analysts expecting future volatility to be driven by gyrations in the greenback and possible fund sales.
Spot gold fell to $845 an ounce after the dollar jumped following better-than-expected US jobs data, but the metal rebounded when the price dipped below $850 an ounce and attracted fresh buyers, analysts said.
It was at $854.20/$855.40 at 1440 GMT against $850.25/$851.65 in New York late on Thursday.
"It will stay very volatile for sure and we need to have our eyes on the forex market so when the dollar is able to recover more, 800 is probably the next target on the gold side," said Michael Kempinski, senior precious metals trader at Commerzbank.
"I think the physical off-take is not enough to absorb all the selling which is coming out of the funds which still have massive long positions," he said.
The dollar jumped to two-month highs versus the yen after data showed the US economy lost just 20,000 jobs in April, fewer than economists had forecast.
Expectations
The US jobs report bolstered expectations that the Federal Reserve may be nearing the end of its rate-cutting cycle and backed a growing view that the US economic slowdown may not be as deep as some originally thought.
Some analysts expected the gold market to hold above the $850 level. "But if it is broken convincingly, then the whole precious metals complex might go down further," said Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus, a German trading group.
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