By: Tom Jennemann

New York 06/01/2012 - Gold on the Comex division of the New York Mercantile Exchange ended the week on a indecisive note with eurozone anxiety continuing to cast a wide shadow over the commodity markets.

Gold futures for February delivery closed down $3.30, or 0.2 percent, at $1,616.80 an ounce. However, the yellow metal did still have a positive start to 2012 by advancing 3.2 percent on the week.

Commodity and equity markets have recently tried to make sense of two divergent narratives.

In the US, the recovery is gaining steam as evidenced by Friday's Labor Department report that the country gained 200,000 jobs in December, exceeding both a projected 152,000 and November's total of 120,000.

But, conversely, Europe continues to wallow in a debt crisis. A disappointing French long-term bond sale earlier this week set a slightly negative tone for next week's auctions in Italy and Spain.

Additionally, rating agency Fitch today downgraded Hungary sovereign debt by one notch to BB+, citing further deterioration in its growth outlook.

Given the backdrop of weak European sentiment and strong US jobs numbers, the dollar unsurprisingly rallied to a fresh 16-month high of 1.2693 against the euro.

“The dollar is a safe-haven for now; not because of [the US] economic recovery as much as the anaemic recovery in eurozone,” George Gero, senior vice president at RBC Capital Markets, said.

“The jobs figures were helpful [for gold] but headlines about the Iranian oil embargo and Hungarian [downgrade] have kept traders from being aggressive and reluctant to add new buys,” Gero added.

The fact that the precious metals, which have recently traded as a risk-asset, didn't rally in a meaningful way following better-than-expected non-farm payroll indicates that Europe continues to be a millstone around the neck of the global economy.

“The [payrolls] number was high but largely irrelevant to precious metals as the jobs market has been looking promising for some time now and the US economy is not at the forefront of gold traders minds,” broker Triland Metals said in a note.

“There was a lot of selling above the settlement and a lot of buying below the settlement in a classic day of indecision where buyers and sellers were matched,” Triland added.

As for the other precious metals, Comex silver for March delivery closed down 61 cents at $28.683 an ounce. Trade ranged from $28.570 to $29.460.

Platinum futures for April delivery on the Nymex closed down $9.80 at $1,408.20 an ounce, while the March palladium contract ended at $614.00 an ounce, off $30.40.

“Palladium, the notable loser today, is looking increasingly weak amidst a vulnerable industrial metals sector,” Triland said.

(Additional reporting by Clara Denina)