Investing.com – Gold prices plummeted to four-year lows on Friday after strong U.S. data and a Bank of Japan decision to expand its stimulus programs sparked hefty demand for the dollar, which tends to trade inversely from the yellow metal.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 2.30% at $1,171.00, up from a session low of $1,161.00 and off a high of $1,202.40.
The December contract settled down 2.15% at $1,198.60 on Thursday.
Futures were likely to find support at $1,158.70 a troy ounce, the low from July 29, 2010, and resistance at $1,235.50, Tuesday’s high.
The yen tanked and sent the dollar soaring after the BOJ said it would raise its monetary base target to an annual increase of 80 trillion from 60-70 trillion, a preemptive move to steer the economy away from deflationary decline while improving the chances of reaching inflation goals.
Adding to pressure, a Japanese government panel overseeing the Government Pension Investment Fund approved plans on Friday for the fund to raise its holding of foreign stocks to 25% of its portfolio from 12%.
Friday’s changes to Japanese monetary policy caught many investors off guard and sent the dollar firming broadly, which came at gold’s expense.
Strong data out of the U.S. also bolstered the greenback.
The Thomson Reuters/University of Michigan final consumer sentiment index rose to a seven-year high of 86.9 this month from 86.4 in September. Analysts had expected the index to remain unchanged.
In addition, industry data showed that the Chicago purchasing managers’ index rose to a three-and-a-half year high of 66.2 in October from 60.5 in September, confounding expectations for a reading of 60.0.
The reports overshadowed earlier data showing that personal spending fell 0.2% last month, disappointing expectations for a 0.1% rise, after an increase of 0.5% in August.
U.S. personal income rose 0.2% in September, less than the expected 0.3% gain, after a 0.3% advance the previous month.
Meanwhile, silver for December delivery was down 1.96% at $16.098 a troy ounce, while copper futures for December delivery were down 0.52% at $3.047 a pound.