Gold futures fall, but gain almost 11% year to date

By Polya Lesova & Myra P. Saefong, MarketWatch
Last update: 4:29 p.m. EDT June 30, 2008
SAN FRANCISCO (MarketWatch) -- Gold futures closed lower for Monday's session as oil prices eased back from record levels and the U.S. dollar regained some lost ground, but gold still ended the first half of the year nearly 11% higher.
"It's all about the dollar right now," said Dale Doelling, chief market technician at Trends In Commodities, in emailed comments. "A sharp decline in the greenback overnight gave gold and crude oil every reason to trade sharply higher, but the dollar is showing signs of life -- pulling gold lower ... and crude well off its high."
Gold for August delivery closed at $928.30 an ounce on the New York Mercantile Exchange. It finished Monday with a loss of $3 for the session.
Year-to-date, however, front-month gold futures climbed $90.30, or 10.8%, from the close of $838 on Dec. 31, 2007.
They're also up 0.7% for the second quarter and 4.1% higher than the close from a month ago.
Weighing on gold prices Monday was a rebound in the U.S. currency. The dollar index , which tracks the performance of the greenback against a basket of other major currencies, was last at 72.43, up from 72.306 late Friday. See Currencies.
"End of quarter profit-taking has helped the U.S. dollar recover the majority of its earlier losses," said Kathy Lien, chief strategist at DailyFX.com.
"It is going to be a very active week for the currency market," Lien said. "The ECB [European Central Bank] interest rate decision and the non-farm payrolls report collide to create the perfect storm for the U.S. dollar."
The European Central Bank is widely expected to hike its key lending rate by a quarter of a percentage point, to 4.25%, on Thursday.
Last week, gold posted a weekly gain of $27.60 an ounce after the Federal Reserve kept its key interest rate unchanged at 2%, boosting gold's value as a hedge against inflation.
"Market sentiment has turned more positive after the Fed decision last week, and given the wider euro/U.S. rate differential, the dollar will remain in a more bearish mood," Moore said.
The benchmark crude-oil contract soared to a new record high above $143 a barrel early on Monday, as traders' appetite for energy futures continued unabated, but prices closed lower. See Futures Movers.
Also on the Nymex Monday, September silver fell 20 cents to close at $17.51 an ounce. Front-month silver futures are up 17.4% year to date.
July platinum tacked on $10.40 to $2,069.50 an ounce Monday. It's up 35.4% year to date.
September palladium fell $6.45 to end at $464.75 an ounce -- up 24.4% year to date
And September copper closed nearly flat at $3.8825 a pound -- up 27.7% year to date.
On the equities side Monday, the Amex Gold Bugs Index closed down 0.1% at $91.40 and the iShares Silver Trust ETF dropped 0.4% to finish at $172.63. The Market Vectors-Gold Miners ETF rose 0.6% to close at $48.59. End of Story
Polya Lesova is a MarketWatch reporter based in New York.
Myra P. Saefong is MarketWatch's assistant markets editor, based in San Francisco.