Metals Stocks
March 22, 2010, 3:03 p.m. EDT · Recommend · Post:

Gold futures close below $1,100/oz, first time in three weeks

SAN FRANCISCO (MarketWatch) -- Gold futures ended lower Monday for the second consecutive day, as the dollar rose for much of the session and investors focused on the risk global interest-rate increases could curb appetite for commodities.

Gold for April delivery fell $8.10, or 0.7%, to $1,099.50 an ounce by the close of floor trading on the New York Mercantile Exchange, below the $1,100-an-ounce mark the yellow metal had managed to hold for the past three weeks.

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• See all the latest markets video /conga/story/misc/markets.html 55637 Gold for May delivery, a more thinly traded contract, also lost $8.10 to settle at $1,100.10 an ounce.

Other commodities felt the pinch from the dollar, which rose for much of the session. Silver, palladium and copper also finished lower Monday. Oil recouped some of its earlier losses as it tracked U.S. equities.

Concerns about Greece, far from clearing up, kept applying pressure on the euro, and were amplified after German Chancellor Angela Merkel said the European Union should consider letting Greece turn to the International Monetary Fund for assistance, said The Wall Street Journal on its Web site Monday.

Merkel also said that E.U. leaders meeting in Brussels later this week will not be discussing a financial package for Greece, noting that the country has not yet reached a point of no return, the newspaper said.

India's surprise interest-rate increase on Friday also loomed large in the minds of investors. India, the world's top gold consumer, and perceptions "that prices might have further work to do to the downside kept Indian buyers at bay over the weekend, despite expectations that they might make a beeline towards the local bazaars in the wake of Friday's fall in prices," said Jon Nadler, senior analyst at Kitco Metals Inc., in a note.

The SPRD Gold Trust /quotes/comstock/13*!gld/quotes/nls/gld (GLD 107.89, +0.14, +0.13%) the largest exchange-traded fund backed by gold, fell 0.7%. The ETF has gained 1.3% in the last three months and nearly 15% in the past 12 months.

India's interest-rate increase came on the heels of China tightening monetary and lending policies and the prospects that the Federal Reserve would raise its discount rate again, analysts with MF Global noted.

Google is expected to announce its next steps in China this week. WSJ's Jessica Vascellaro joins Stacy Delo on Digits to discuss. Plus, the mobile phone business descends on Las Vegas for the giant CTIA Wireless trade show.

Gold's Monday dip added to a 2% decrease on Friday, the largest one-day sell-off since Feb. 4. Gold prices settled at $1,107.60 Friday.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 80.60, -0.16, -0.20%) which measures the U.S. unit against a trade-weighted basket of six major currencies, declined 0.2% at $80.65. It had risen earlier.

A stronger dollar generally pulls down commodities as it makes them more expensive for holders of other currencies. It also reduces gold's appeal as a hedge against weaker currencies.

Among other metals, palladium finished the day amassing the most losses. Palladium for June delivery, the most active contract, fell $7.9, or 1.7%, to $460.60 an ounce.

Copper for May delivery rose to $3.3805 a pound from $3.3725 in the prior session.

Platinum for April delivery declined $7.30 an ounce, 0.5%, to $1601.30 an ounce.

Silver for May delivery fell 10 cents, or 0.5%, to $16.93 an ounce.
Claudia Assis is a San Francisco-based reporter for MarketWatch.

Steve Goldstein is MarketWatch's London bureau chief.

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