Gold futures fell below $US960 an ounce in New York on Friday after the July US jobs report and stronger dollar curbed the metal’s attractiveness as an alternative investment.
The dollar rallied against its major rivals after the jobs data, a move that surprised many in the markets which had been looking for further losses.
Gold’s losses were despite good news for the metal’s medium term outlook from an agreement between European central banks on future sales of official gold holdings.
That saw 19 European central banks, led by the European Central Bank, extend a cap on gold sales for another five years starting from September.
While the move had been widely expected, agreement was expected for a month or so.
Comex August gold futures fell $US3.40, or 0.4%, to end at $US957.30 an ounce.
The more active December contract slid $US3.40, or 0.4%, to $US959.50.
Despite the loss, gold ended the week up 0.4%.
In other metals, September Comex copper rose 3.35 cents, or 1.2%, to $US2.785 a pound. September silver gained 2.3 cents, or 0.2%, to $US14.668 an ounce.
Copper finished up 6.1% for the week.
The European central banks agreed to limit total gold sales to 400 tonnes a year, with total sales over the five-year period capped at 2,000 tonnes.
The existing five-year agreement, which ends in September, capped annual sales at 500 tonnes and total sales at 2,500 tonnes, but the central banks haven’t sold the maximum amount of gold for the past couple of years.
The central banks said the International Monetary Fund’s intention to sell 403 tonnes of the metal will "be accommodated" within the ceiling, the ECB said in a statement.
Central banks have cut their gold sales in recent years. Signatories of the existing sales agreement are expected to sell 140 tonnes of gold this year, much lower than the annual cap, according to GFMS, the London-based precious metals consultancy. That would be the lowest level since 1994.
GFMS estimated that net official gold sales slumped to 39 tonnes in the first half of 2009, down 73% from a year ago.
The majority of gold sales came from countries that have signed the Central Bank Gold Agreement, while non-CBGA countries were overall net buyers. The CBGA’s signatories sold 92 tonnes of gold in the first half, GFMS said.
The new plan takes effect on September 27, immediately after the expiration of an existing five-year agreement.
In a separate statement, the Swiss National Bank said it had no plans "for any further gold sales in the foreseeable future".
The SNB said its gold holdings of 1,040 tonnes constitute a substantial part of its currency reserves.
On the London Metal Exchange, three month copper rose $US125, or 2.1%, to $US6,150 a tonne ($US2.79 a pound). Among other metals traded on the LME, aluminum, zinc, tin, lead and nickel also rose after the US jobs numbers were released.
Crude oil futures fell in New York on Friday, cut by the rise in the US dollar after the jobs report.
Nymex September oil futures ended down $US1.01, or 1.4%, at $US70.93 a barrel, but was still up 2.1% for the week, the 4th week in a row that it has risen.
The US dollar rallied more than 2% against the Japanese yen to the highest level since June. It also traded higher against the euro and the British pound. The Aussie dollar finished under 84 US cents as it fell as well on the greenback’s strength.
Not helping sentiment were reports that The Organization of the Petroleum Exporting Countries increased crude-oil production by 100,000 barrels a day to 28.57 million barrels a day in July.
A survey of OPEC and oil-industry officials and analysts revealed that OPEC production has risen in April, May and June after having fallen steadily since August 2008.
The survey said the level of compliance was now below 70% of the official OPEC quotas.
Sugar was the other bigger mover, hitting multi-year highs in London and New York.
Reuters reported that October white-sugar futures surged to a record $US539.50 a tonne on Liffe in London, continuing their record-breaking streak.
Separately, ICE October raw-sugar futures hit an intraday high of 20.85 US cents a pound, their highest level since at least 1994.
The contract ended up 5.1% at 20.81 US cents a pound.
That was the highest close since 1981.
Sugar prices jumped 11.7% last week and have risen 76% so far this year amid mounting supply concerns.
Bad weather has affected production in India and Brazil, the world’s two largest producers.
Global sugar stocks are estimated to be near record lows, and buyers, such as governments and international food and beverage companies, have had to compete for tightening supplies.
Both Mexico and Egypt announced large purchases of sugar this week and other countries are expected to buy.
The sugar market is viewed as being in unknown territory, having traded above current levels only on two previous occasions.
Both involved massive price surges. Prices surged above 50 cents per pound in 1974-75 and 1980-81.
