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SAN FRANCISCO (CBS.MW) -- Gold futures fell under $406 an ounce Friday, touching their lowest level in six sessions, with the U.S. dollar recovering some ground against foreign currencies and concurrently easing metals demand.
Gold for April delivery traded as low as $405.70 an ounce on the New York Mercantile Exchange -- its lowest level since Feb. 11. At last check, it was at $406, down $4.30.
Pressure to get rid of short positions on the dollar boosted the U.S. currency against both the euro and the Japanese yen. See Currencies Report.
But Grady Garrett, chief trading strategist at EnergyTrendAlert.com, a commodity information provider, questioned whether the dollar will manage to hold its gains.
"With the current fundamental setup (low interest rates and expanding deficit) it is unclear that any near-term bottom in the greenback will be able to hold up," he said.
"The prospect of further dollar weakness is likely to continue to underpin the price of the yellow metal," Grady said.
But if it's true a bull market climbs a "wall of worry," then gold bulls are "going to have to figure out how to sidestep days when a declining euro is impeding their process," said Peter Grandich, editor of The Grandich Letter, an investment publication.
"The last missing ingredient to what would be a classic gold bull market is to have gold rising in most major currencies, not just against a falling U.S. dollar," he said.
"The fact that gold still retreats when the euro declines tells us bulls we still have some work in front of us," Grandich said.
Broad-based retreat
Also Friday, copper futures eased back after climbing in each of the six previous Nymex sessions, and other metals prices followed suit.
March copper fell to $1.305 per pound, down 2.45 cents. The March silver contract traded down by 5.8 cents at $6.60 an ounce, while April platinum fell by $8.10 to $845 an ounce and sister metal March palladium stood at $232.50 an ounce, down $10.75.
On the supply end, copper supplies were down 1,328 short tons at 249,168 short tons as of late Thursday, according to Nymex. Silver stocks were down 47,836 troy ounces at 123.9 million troy ounces.
Meanwhile, gold inventories stood at 3.48 million troy ounces, down 32 troy ounces from the previous session.
Equities pull back
Key indexes for mining shares mirrored gold's decline to trade at their lowest levels in two weeks.
Tracking the mining sector as a whole, the CBOE Gold Index ($GOX: news, chart, profile) fell by 1.1 percent to stand at 84.68, and the Amex Gold Bugs Index (HUI: news, chart, profile) declined 1.7 percent to 225.95.
The Philadelphia Gold and Silver Index ($XAU: news, chart, profile) shed 1.2 percent to 99.08.
Among the biggest losers were shares of Bema Gold (BGO: news, chart, profile) down 12 cents, or 3.5 percent, to $3.32, while Freeport-McMoRan Copper & Gold (FCX: news, chart, profile) traded at $41.38, down 93 cents, or 2.2 percent.
Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.
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So where is the price of gold going to go? For a good portion of last year we had a tremendous run for the shiny yellow metal, yet lately in January and February it has taken a bit of a hit, yet recovered some again.
Where do you folks think its gonna go? Do you invest in precious metals? Personally I have a small amount in precious metal funds...