Daily Gold Update

Source: MarketWatch

San Francisco— Gold futures fell under $550 an ounce Thursday, but closed well above the session's worst level as traders chose to lock in profits, but analysts remained upbeat about the precious metal's prospects.

"The strong close in New York [Wednesday] has again prompted profit taking from Asian traders…and again signals the market may need to consolidate back towards $525 before pushing through $550 and setting a new high for the year," James Moore, an analyst at TheBullionDesk.com in London, said in a note to clients.

Gold for February delivery fell 80 cents to finish at $549.30 an ounce on the New York Mercantile Exchange after climbing more than $4 on Wednesday. The contract traded as low as $543.20 Thursday.

"The market is now in a highly overbought condition, which would lead me to believe that some short-term weakness may ensue," said Dale Doelling, chief market technician at Trends In Commodities.

Even so, "if the early going is any indication, then 2006 is going to be a year of enormous returns for precious-metals investors and, I believe, the best is yet to come," he said.

March silver closed down 0.5 cent at $9.06 an ounce. April platinum ended up $4.70 at $1,030 an ounce — trading at its highest level since mid-December, while March palladium shed 90 cents to close at $276.60.

March copper fell 0.75 cent to end at $2.0875 a pound, extending weakness from Wednesday.

On the supply side, copper, gold and silver inventories were all unchanged as of late Wednesday, according to Nymex, with copper at 7,762 short tons, gold at 7.01 million troy ounces and silver at 120.6 million troy ounces.

Meanwhile, after closing out Wednesday's session modestly higher, indexes tracking the metals and mining equities lost ground.