Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures closed above $610 an ounce Thursday to reach their strongest level in three weeks as some analysts bet that prices have bottomed in the wake of strong overseas demand.

"For the moment, there appear to be sufficient numbers of Asian buyers out there willing to acquire whatever gold flows onto the global market floors," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.

But "as much as the market has been lifted by the rising tide of Indian bullion demand, the bulls still have a lot of road ahead left to repave," he said.

"Indeed, until and unless the market can demonstrate serious consolidation above $640 or higher, there remains the threat of a hedge fund or two chopping values down in a swift, profit-motivated bailout."

Gold for December delivery closed up $7.60 at $610.90 an ounce on the New York Mercantile Exchange, its highest finish since Sept. 8.

The contract closed above $600 an ounce Wednesday for the first time in two weeks, finding support in rallying energy prices and continued reports of strong physical demand from India during its wedding season.

Meanwhile, "the specter of Iranian recalcitrance has once again become visible in the geopolitical background, as the country's leaders boldly taunt the White House and the West, and declare that they have an 'inalienable' right to develop nuclear technology," said Nadler.

"Of course, this makes for nervous trigger fingers of more than one kind," he said, pointing out that market speculators in oil and gold, are "naturally first in line."

Crude futures moved higher Thursday with traders betting that ample supplies of oil and its products are likely to encourage the Organization of the Petroleum Exporting Countries to cut production quotas.

On a technical basis, December gold must log consecutive closes above the 20-day moving average of $605.30, said Dale Doelling, chief market technician at Trends In Commodities.

If that happens, gold should rally up to the $626-$638 area before meeting any significant resistance, he said.

"The recent turnaround in the energy complex is certainly a factor here and, if a bottom has been made, then look for increased volatility as the bulls and bears struggle for dominance in the pits," he warned.

Other metals closed higher, with the exception of copper, which saw its December contract fall 5.9 cents to $3.428 a pound.

December silver finished up 3.5 cents at $11.735 an ounce. October platinum rose $11 to $1,150 an ounce and December palladium climbed by $4.10 to $324.10 an ounce.

On the supply side, gold inventories were down 24.851 troy ounces at 7.89 million troy ounces as of late Wednesday, according to Nymex data. Silver supplies rose by 442,214 troy ounces to 105.3 million and copper supplies fell by 695 short tons to 20,855 short tons.

Metals-mining equities were little changed, with strength from the rise in the precious metals offset by weakness in the stock market.

Among the notables, shares of Apex Silver Mines were 3.5% higher at $16.66 but Agnico-Eagle Mines shares fell by 1.4% to $32.08.

The Philadelphia Gold and Silver Index traded at 130.61 and the Amex Gold Bugs Index stood at 305.36, with both down 0.1%. The CBOE Gold Index was nearly flat at 133.85.