Daily Gold Update

Source: MarketWatch

San Francisco— Gold futures climbed more than $10 an ounce Friday to close at a two-week high, up over 1% for the week as investors fretted over an explosion at an oil refinery in Saudi Arabia and weak U.S. economic data.

"The news of an attack on an oil facility in Saudi Arabia is just an example of the many different geopolitical events that underpin the secular gold bull market," said Peter Grandich, editor of the Grandich Letter.

"Throw in real physical and investment demand, inflation fears, currency turmoil, manipulation and shrinking mine supply, and you should realize a gold bear may want to stay in hibernation long after winter ends," he said.

Gold for April delivery climbed as high as $562 an ounce on the New York Mercantile Exchange, its highest level since Feb. 10. The contract closed up $10.30, or 1.9%, at $561.20. It closed out last Friday's session at $554.60, so it's $6.60 higher for the week.

Saudi authorities prevented an attempted attack on one of the biggest oil-production facilities in the world, as guards opened fire on at least two cars carrying explosives as they attempted to slam into the gates in an apparent suicide attack, the BBC said. It's believed to be the first time that Saudi oil facilities have been attacked, it said.

The news lifted futures prices for oil by almost 4% Friday.

"The trigger fingers hovering over all of the instability-sensitive commodity 'buy' buttons (gold, oil, etc.) are as jittery as ever," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.

"The mere thought of an organized, expanded terrorist effort to sabotage the West's oil lifelines (and thereby its economies) has people looking for cover and heading straight towards gold," he said.

"Gold would like to go somewhat lower to follow long-established seasonal patterns as well as to complete the corrective phase it was in, after a swift race to nearly $600 per ounce," said Nadler.

But "the market finds itself compelled to react to overwhelmingly distressing developments coming from the across the globe," he said, adding that "whatever strength technical and fundamental factors previously contributed to gold prices, they are now taking a back seat to geopolitical realities and their effects on investor psychology."

Adding to support Friday, "economic data from the U.S. has been extremely negative…after durable goods orders fell by 10.2% in January," James Moore, an analyst at TheBullionDesk.com, said in a note to clients.

But the U.S. dollar had a muted reaction immediately following the sharply weaker-than-expected durable goods orders number, which showed the largest decline since July 2000.

Wary trade