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1058.30 - Gold hits 3-month low as risk appetite retreats
Jan Harvey
LONDON
Fri Feb 5, 2010 7:59am EST

LONDON (Reuters) - Gold slipped nearly 1 percent to its lowest since early November on Friday as the dollar rose on rising risk aversion due to fears over the fiscal health of peripheral euro zone economies.

Equities and many other commodities also fell, with European shares hitting three-month lows, copper falling to its weakest since October and the euro-dollar reaching its lowest in more than eight months as concern grew over euro zone sovereign debt.

Spot gold was bid at $1,053.65 an ounce at 1233 GMT, against $1,062.60 late in New York on Thursday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell $8.70 to $1,054.30 an ounce.

The dollar hit a seven-month high versus a currency basket and its strongest since May against the euro on Friday as a widening in euro zone government bond spreads highlighted fears over the indebtedness of the region's weaker economies.

"It looks like the next few days are going to see further weakness in gold and further strength in the dollar," said Standard Chartered analyst Dan Smith. "We see $1,020 an ounce as the next point to look for."

Growing sovereign debt problems in the euro zone, highlighted by European Central Bank chief Jean-Claude Trichet in a press conference on Thursday, and rising U.S. jobless claims have sparked jitters about the global economic recovery.

Commodities suffered almost across the board as the U.S. currency rose, making dollar-priced assets more expensive for holders of other currencies.

European stocks slid to their lowest since November on Friday and Asian stocks fell to five-month lows as investors dumped riskier assets.

JOBS DATA EYED

The financial markets are now awaiting further clues on the health of the U.S. economy from the release of non-farm payrolls data at 1330 GMT, seen as a key indicator of economic health.

"A considerably stronger reading than the 10,000 forecast (increase in jobs) could spark a rebound in risk appetite," said TheBullionDesk.com analyst James Moore.

"However on the flip side a worse reading could trigger a deeper correction," he added.

Standard Chartered's Smith said the growing risk aversion permeating the markets meant the jobless figures would have to be much better than expected to change the market direction.

"In the last few days we have seen anything that is vaguely negative leapt on, and anything positive generally being ignored," he said. "The numbers will have to be extremely good to make any difference to the current market mood."

However, premiums for gold bars in Asia were steady above $1 on Friday as jewejewelersllers made last-minute purchases ahead of the Lunar New Year, with bargain hunting from other Asian consumers also emerging as bullion held near three-month lows. <GOL/AS>

Silver was at $15.12 an ounce versus $15.23 and platinum was at $1,480 an ounce versus $1,499.50.

Palladium, a smaller and less liquid market than other precious metals, hit a 2010 low of $379.50 an ounce and was later at $388.50 against $406.50.

Holdings of new platinum- and palladium-backed ETFs launched in New York last month have stabilized after rising sharply in the first days of their existence, prompting price gains.

Holdings of ETFS Physical Platinum Shares (PPLT.P) were unchanged for a third session at 244,941 ounces, while those of ETFS Physical Palladium shares were steady for a seventh day.

http://www.reuters.com/article/ousivMolt/idUSTRE5B10OV20100205