Gold price posts biggest weekly gain in 3 months
Gold prices fell on Friday as a record high in the S&P equities index and a higher dollar prompted bullion investors to take profits, a day after the metal's biggest rise in nine months on fresh bullish bets and short covering.
Silver rose, ignoring gold's weakness, lifted by technical buying after a break above its 200-day average and as stronger copper prices lifted the grey metal's industrial appeal, traders said.
The yellow metal still posted its biggest weekly gain in three months due to a violent military insurgence in Iraq and a softer dollar after the Federal Reserve's comments.
Prior to Friday's drop, bullion had gained 5 percent between Tuesday and Thursday as the Federal Reserve's lack of commitment to raise interest rates and continued tensions in the Middle East unleashed a wave of short covering.
"At this point, gold appears overdone," UBS strategist Edel Tully said. "Strategic buyers are remaining on the sidelines; this is a move that is currently dominated by short-term traders."
Spot gold dropped 0.4 percent to USD 1,314.45 an ounce by 3:22 p.m. EDT (1922 GMT), after jumping 3.3 percent in the previous session. The metal was about 3 percent higher for the week.
U.S. COMEX gold futures for August delivery settled up USD 2.50 at USD 1,316.60 an ounce, with trading volume about 10 percent above its 30-day average, preliminary Reuters data showed.
COMEX gold open interest, a liquidity gauge measuring the total number of long and short outstanding positions, climbed 1.5 percent to about 387,000 lots, suggested a combination of new buying and short covering, traders said.
Silver climbed 0.6 percent to USD 20.83 an ounce. Turnover of U.S. silver futures was more than double their 30-day average.