US gold drops on stronger dollar

Gold futures on the COMEX division of the New York Mercantile Exchange dropped on a stronger dollar Friday, ending the week with a loss of 2.9 percent. The most active gold contract for December delivery dropped 10. 5 dollars, or 0.79 percent, to settle at 1,313.2 dollars per ounce. U.S. dollar rose against other major currencies, especially the euro, on fears that the European Central Bank may cut interest rates as inflation in the eurozone fell to the lowest level in almost four years in October. The dollar index, a gauge of greenback against a basket of currencies, rose to 80.727 Friday from 80.221 late Thursday. The U.S. dollar has been quite strong in recent sessions, making dollar-denominated commodities such as gold more expensive for holders of other currencies. Data released Friday also weakened gold. The Institute for Supply Management's manufacturing index climbed to 56.4 percent in October, the highest level since April 2011, up from 56.2 percent in September. This indicated that the U.S. economy continued to improve, though at a slow pace. Gold has broken the support level of 1,320 dollar per ounce and is quickly approaching the critical level of 1,300 dollars per ounce. Market analysts believe that gold seems to be stepping into a wide fluctuation range around 1,300 dollars per ounce. Silver for December delivery slipped 3 cents, or 0.14 percent, to close at 21.837 dollars per ounce. Platinum for January delivery rose 3.5 dollars, or 0.24 percent, to close at 1,451.9 dollars per ounce.