Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures climbed near $690 an ounce Monday, sending the benchmark contract to a seven-month high with analysts upbeat about gold's longer-term prospects as continued defiance by Iran over its nuclear program underscored the metal's safe-haven appeal.

There was a bit of profit taking at the upper end of the trading range, near $690 for spot prices, as oil prices retreated, said Jon Nadler, an investment-products analyst at bullion dealer Kitco.com, in e-mailed comments.

But overall, "the threat of a renewed round of anti-Iran sanctions and the potential for a disruption in crude-oil flow from the world's fourth largest producer is keeping safe-haven buyers on the alert as we start the week," he said.

Gold for April delivery closed up $3.10 at $689.80 an ounce on the New York Mercantile Exchange — marking its highest closing level since mid-May. Monday's peak of $691.80 was short of Friday's seven-month, intraday high of $691.90. The contract gained 2.1% last week.

Tensions surrounding Iran's uranium-enrichment program boosted energy prices earlier Monday, but crude futures pulled back by the afternoon as traders took advantage of a three-session rally of nearly 4%.

Crude oil for April delivery was last down 14 cents at $61 a barrel in New York, after having reached a high of $61.75 earlier in the session. The contract had advanced in the previous three sessions on Nymex, closing Friday at the highest level of the year, on worries about tightening supplies, Iran and violence in Nigeria.

"With the weather and geopolitical powder keg in place, oil is likely headed to $65 and gold to $700," Kevin Kerr, editor of MarketWatch's Global Resources Trader newsletter, said in e-mailed comments.

Oil provides background support, while Iran's nuclear program continues to draw safe-haven hedging, said James Moore, an analyst at TheBullionDesk.com. "Those factors are likely to feature heavily in the week ahead, particularly as the United Nations may impose sanctions on the world's fourth-largest oil exporter," he said in a note to clients.

The U.S., Russia, China, France, and Britain — the five permanent members of the U.N.'s Security Council — as well as Germany convened in London to discuss ways to respond to Iran's refusal to halt nuclear development, the Associated Press reported. The six countries will probably discuss trade and arms sanctions, the AP reported.

Last week, the U.N.'s nuclear watchdog agency said Iran has ignored a Security Council deadline to stop uranium enrichment and had instead expanded its program, the AP reported.

"The rhetoric coming from both sides of the nuclear development issue continues to become more heated and more confrontational," Nadler said.

For now, "gold and silver are both capable of making big moves at any moment," said Peter Spina, chief investment strategist at GoldSeek.com, in e-mailed comments. Prior highs from early 2006 are "well within reach at this time."

And overall, "the market has a definite upside bias here," he said. "If the market pulls back, it would indicate consolidation before the next big move higher."

Multiple factors to drive gold higher