Daily Gold Update

Source: MarketWatch

San Francisco— Gold futures lost almost $10 an ounce Wednesday to close at the lowest level in over a week after trading a quarter-century highs in the past two sessions.

"The markets are trying to move off their highly overbought condition," said Dale Doelling, chief market technician at Trends In Commodities. "This dip is an excellent opportunity for those who are looking to get long the market."

Gold for February delivery fell $9.80, or 1.8%, to finish at $544.50 an ounce on the New York Mercantile Exchange, marking its lowest closing level since Jan. 6.

Prices touched a low of $543.30 earlier, the lowest since Thursday on an intraday basis. Prices climbed to a 25-year intraday high of $561.50 on Tuesday.

Prices found some support around the $545 level, said James Moore, an analyst at TheBullionDesk.com in London, and support below that level stands at $535/$525.

Still, " the tone remains firmly bullish for the moment as rising oil cost and geopolitical concerns heighten gold's 'safe-haven' as well as investment appeal," he said in a note to clients.

The gold market was also caught up in the turmoil in the Japanese stock market, where trading ended before its regularly-scheduled close as a flood of sell orders threatened to overwhelm the Tokyo Stock Exchange's systems.

The Nikkei plunged 2.9%, after falling 2.8% on Tuesday. The Topix Index of all first-section issues ended down 3.5%. See Asia Markets.

The steep decline led to heavy selling of crude futures on the Tokyo Commodities Exchange as funds liquidated positions in order to meet large margin calls, according to Action Economics.

Economists at the research firm expect the impact to be short-lived.

"Gold market fundamentals still remain robust (high physical demand, constrained output), though, and the latest decline will tempt more buying once the dust settles on the Tokyo stock market," they said.

Most other metals fell along with gold, with March silver down 20 cents to close at $8.873 an ounce and March palladium off $11.45 an ounce to end at $273.90. After touching a nearly 26-year high of $1,049.50 on Tuesday, April platinum closed down $19.20 at $1,029.90 an ounce.

March copper was the lone gainer, closing up 0.9 cent at $2.12 a pound.

On the supply side, copper inventories were unchanged at 7,762 short tons as of late Tuesday, according to the New York Mercantile Exchange.

Gold supplies fell 11,849 troy ounces to 7 million troy ounces, while silver stocks were flat at 120.6 million troy ounces.