AP News, January 4th, 2008
Gold prices ended an erratic session lower Friday, with traders cashing in profits following a disappointing U.S. employment report.
Other commodities mostly fell as markets took a breather from a week of highs. Soybeans rose to a 34-year high before settling lower.
An ounce of gold for February delivery dropped $3.40 to settle at $865.70 on the New York Mercantile Exchange. The precious metal hit $871.80 earlier in the session, shy of the all-time record of $875 an ounce set in 1980.
Despite the loss, gold was up $23 over last Friday's closing price of $842.70.
Friday's decline followed a Labor Department report showing that employers last month added the fewest new jobs to their payrolls in more than four years, driving the nation's unemployment rate to a two-year high of 5 percent.
Total payrolls — both private employers and government — rose by just 18,000 last month, the poorest performance since August 2003, when the economy suffered job losses resulting from the 2001 recession.
The report stoked fears of a recession, weakening the dollar and briefly boosting gold prices before traders took profits on the metal's sharp rise this week. The inflationary combination of a lower dollar and record-setting oil prices has boosted the precious metal's appeal as a safe-haven investment.
"We had the perfect storm on Wednesday coming off the New Year's holiday" with a weak dollar contributing to spiking gold and oil prices, said Richard Feltes, senior vice president and director of commodities research for MF Global. "Today, it's the perfect storm in reverse."
The dollar's steep decline against the 15-nation euro has been a major driver behind the metal's advance from less than $650 an ounce in January 2007. Gold prices increased almost 32 percent last year.
Still, when adjusted for inflation, gold remains well below the high of $875 an ounce set in 1980. An ounce of gold at that price would be worth $2,115 to $2,200 today.
The euro rose to $1.4748 against the dollar in late New York trading.
Other precious metals also fell Friday. March copper dropped 3.05 cents to settle at $3.1575 a pound on the Nymex, and March silver lost 3.8 cents to $15.462 an ounce. April platinum fell $4.70 to end at $1,547.10 an ounce.
Rising oil prices, which retreated Friday from this week's record levels above $100 a barrel, have further boosted gold, which investors use as a hedge against inflation and political uncertainty.
Light, sweet crude for February delivery fell $1.27 to settle at $97.91 a barrel on the Nymex. The unemployment data prompted concern that a possible recession could dampen demand for oil.
Agricultural futures ended mixed.
March soybeans fell 5 cents to settle at $12.625 a bushel on the Chicago Board of Trade, after rising to $12.78, a fresh 34-year high, on speculation that demand for the crop will grow in 2008.
Wheat for March delivery fell 13.5 cents to $9.315 a bushel. March corn rose 0.75 cent to end at $4.6675 a bushel and March oats gained 4.25 cents to $3.2975 a bushel.
