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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...

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onetime2

It all depends on how long a time frame you're talking about. I suspect it will be heading down for the next year or so. Other investments are looking more favorable as the US economy recovers.

If you see GDP figures tank in the next report or two, I think gold will rise somewhat. If the opposite happens, the price will drop.

Personally, I do not invest in metals (unless you count the engagement ring I bought a few months back).

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Strive to be more curious than ignorant.

Rodney

If inflation rises, gold will go up. Some people see inflation coming back, at least in part because of gold prices.

Cardinal Syn

I am kinda in the gold market. Since i am a jeweler and all. Its been hovering in the 400 range for awhile now. I saw it get as high as 420 a ounce. But then dipped back down.

Where it goes , no one knows.

I wouldnt invest in gold unless yer in the buisness of buying gold from people. Its not worth it otherwise. It fluxuates alot.

clifclav

I've often thought about buying some gold coins just to keep in the safe in case everything goes south. What would be a good coin to buy and where can I get the best price on them. Or should I just buy cheap ugly jewelry and melt it down? hehehe

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Yakk

Gold seems to act like a non-national currency. Unlike most currencies, no goverment can arbitrarally manipulate the prices of gold: they have to actually do something that takes effort, they can't just tweak a number on a computer and send the currency into a tailspin.

So, in a way, investing in gold is like investing in currencies.

Currencies don't do anything, they are just facillitators. While you can make money off their fluctuations, they aren't actually creating value in and of themselves.

Basically, you make money on currencies by taking money from people who have to use currencies to do their business, or by taking money from other people who are trying to make money on currencies.

Nobody has to use gold to buy/sell goods (like you need USD to buy/sell american goods) other than jewelers and the occasional electronics manufacturer/chemist. Which means most of your profit will come from people who are seeking to make money buy buying gold, and fail.

This isn't true of stocks/bonds/etc: stocks and bonds represent resources used to create value (ie, more resources).

You can make alot of money off buying and selling comic books, but in reality you are doing little better than playing roulette on a crooked table.

All of the above is simply my opinion.

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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

eribrav

clifclav, the most liquid gold coins are American Eagles and Canadian Maple Leafs. They sell at a significant premium to the price of an ounce of gold, but can be expected to maintain that premium.

I have purchased bullion coins from Tulving (Tulving.com) and I am happy with prices and service.

saru

Gold might not be such a bad investment. There has been a signifcant surge in demand for gold, and, in fact, most other precious metals, coming out of China. China's growing industrial base is a becoming a huge consumer of precious metals, which are essential for a whole host of industrial products.

In other words, there is and probably will be a big global buyer for gold for some time to come...