Money and Metals

MarketWatch covers the markets. "Gold futures tumbled in a broad commodities sell-off Friday, as the dollar rallied against other major currencies, damping investor appetite for metals. Gold for August delivery closed down $14.90 at $650.30 an ounce on the New York Mercantile Exchange, marking a five-session losing streak. The contract has tumbled $26.60 this week."

"'Gold sustained a further damaging blow on Friday, as price support after price support gave way in the wake of massive selling on the trading floors,' said Jon Nadler, analyst at Kitco Bullion Dealers. 'Silver sustained heavy losses as well ... An ugly day, if we ever saw one,' Nadler said."

"Silver and copper futures plunged about 3%, while energy futures also fell across the board, with crude oil tumbling 3%."

"'The firm U.S. dollar helped trigger the selling today,' said Peter Spina, analyst at GoldSeek.com. 'It appears a break of some technical supports aided the large fall in the metals today. "Once the selling broke some supports, the selling accelerated and the momentum wave was just too strong for the market to see any meaningful reversal from the lows,' Spina said."

"The dollar rallied across the board early Friday, touching a two-month high against the euro. The Dollar Index, which tracks the greenback against the world's major currencies, rose to 82.92, its highest level since April 10."

"The dollar extended some of its gains after a Commerce Department report showed the U.S. trade deficit narrowed by 6.2% in April to $58.5 billion, below the consensus forecast of Wall Street economists of a deficit of $63.5 billion."

"The gold market is in consolidation mode, which may extend through the summer months, Spina said. 'Further weakness as we start next week off should be expected, but buyers are likely to give gold and silver some good bid support just below today's lows,' he said."

"Other metals prices also posted sharp losses Friday. July silver fell 44 cents, or about 3%, to close at $13.040 an ounce. July platinum tumbled $8.70 to $1,286.80 an ounce. September palladium fell $1.85 to $370.60 an ounce."

"'For the moment, it seems gold and the rest of the precious complex will have to weather further weakness as investors look towards assets offering better returns, such as equities and Treasuries,' said James Moore, metals analyst at TheBullionDesk.com, in a research note. 'Gold needs to make a swift move back above the 100-day moving average at $664.80 to avoid further weakness, potentially re-testing last weeks' lows around $650 or possibly extending lower towards the 200-day moving average at $638.40,' Moore said."

"'It seems the US markets are all focused on an economic scenario last seen here in the late 70's: stagflation,' said Edward Meir, analyst at Man Financial, in a research note. 'This is the unwanted combination of slowing growth combined with relatively high inflation and interest rates.'"

"The U.S. Federal Reserve's move to sit tight is being duplicated globally, with the European Central Bank and the Bank of New Zealand both raising rates this week, he said. 'How metals fare given this mindset remains to be seen, but we think the selling, at least in the short-term, could be getting overdone,' Meir said."