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Gold Closes Lower As Dollar Strengthens; Down 4% For Week

3/2/2012 2:16 PM ET

Gold futures closed lower Friday amid a strong dollar and investors preferring to drop riskier assets. The precious metal had made gains yesterday after plunging more than 4 percent on Wednesday after the U.S. Fed Chief's comments before the congress.

Gold for April delivery, the most actively traded contract, dropped $12.40 or 0.7 percent to $1,709.80 an ounce Friday on the Comex division of the New York Mercantile Exchange. Gold traded at an intraday high of $1,725.40 an ounce and a low of $1,705.40 an ounce.

Gold prices were down about 4 percent for the week.

It was a tough week for Gold, with prices dropping 4.3 percent Wednesday under pressure from a strong dollar, following the U.S. Federal Reserve Chairman Ben Bernanke's testimony before the congress. Bernanke failed to give any indication of further quantitative easing, thereby boosting the dollar and piling more pressure on the dollar-denominated gold.

The dollar index, which tracks the U.S. unit against six major currencies, is trading at 79.369 on Friday, up from 78.803 late on Thursday. The dollar traded at 78.819 prior to the release of U.S. manufacturing data.

The euro was trading lower against the dollar at $1.3211 on Friday, from $1.3305 late Wednesday. The euro had scaled a high of $1.3332 intraday.

There was disappointing news from the eurozone with economic data from Spain indicating an increase in jobless claims in February. Spain has also raised its budget deficit target to 5.8 percent of GDP for 2012, as compared to its prior target of 4.4 percent.

Italy's economic growth eased notably in 2011 as the country slipped into recession during the final three months of the year, latest figures from the statistical office Istat revealed Friday. The gross domestic product grew just 0.4 percent last year following a 1.8 percent expansion in 2010. Economists expected a 0.3 percent growth.

The Italian statistical office also reported that the country's budget deficit narrowed more than expected to 3.9 percent of GDP in 2011, while economists expected a decline to 4 percent from 4.6 percent of GDP in 2010.

In other economic news from the eurozone, producer price inflation eased to 3.7 percent year-on-year in January from 4.3 percent in December, Eurostat said. This compares with a consensus forecast of 3.6 percent. On a monthly basis, the industrial producer price index climbed 0.7.

by RTT Staff Writer

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