Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures on Wednesday touched their lowest level in a month as retreating crude-oil prices and modest gains in the U.S. dollar pressured precious-metals prices for a second session.

Gold for June delivery fell $2.50 to $674.80 an ounce on the New York Mercantile Exchange. On Tuesday, gold futures declined $6.20 to close at $677.30 an ounce.

"Picking up where the overseas markets left off, gold dropped … as the correction and consolidation appear to probe ever lower for possible buying support," Jon Nadler, analyst at Kitco Bullion Dealers, said in e-mailed commentary.

Even so, prices Wednesday recovered a bit from the day's lowest level. The June contract had dipped to $670 during the session, the contract's weakest intraday level since April 3.

"Whereas conflicting news (strong factory orders vs. weak job creation) tugged on either side of the dollar, the trading decision was to pull back after this morning's strength," said Nadler.

"Conversely, gold buyers entered the pits near $667 as the support level of $665 came into view and decided to pull the metal up a bit," he said. "The $665 area really is pivotal support and it better hold, if tested."

The dollar extended its prior-session gains Wednesday, touching a two-month peak against the yen, as traders continued to react to a stronger-than-expected manufacturing report released on Tuesday.

Crude-oil futures fell under $64 a barrel Wednesday as traders digested a second-weekly increase in U.S. crude supplies.

Other metals prices also posted losses. July silver fell 3 cents to $13.34 an ounce, June palladium fell 15 cents to $374 an ounce, and July platinum declined $1.90 to $1299 an ounce.

July copper tacked on 1.05 cents to $3.645 a pound after a one-week high of $3.655. The contract gained 2.2% on Tuesday as a strike in Peru continued to threaten production.

On the supply side, gold warehouse inventories rose by 21,448 troy ounces to stand at 7.6 million troy ounces as of late Tuesday, according to Nymex data. Silver supplies fell by 44,534 troy ounces to 131.3 million troy ounces, while copper supplies fell by 78 short tons to 33,071 short tons.

Indexes tracking the performance of stocks in the metals and mining sector moved higher as gold prices recovered from the Wednesday's worst level.

The Amex Gold Bugs Index rose 1.3% to stand at 341.38 points. The CBOE Gold Index traded at 146.40 points, up 2%, and the Philadelphia Gold and Silver Index was up 2.2% at 139.25 points.

Gold stocks were up on "huge volume," said John Stafford, editor of Stafford's Investment Strategy Letter. "It's the "biggest day in months," he said in e-mailed comments.

The Federal Reserve "may be running out, temporarily, of the ability to prop up the plunging … dollar," he said.

As for sector ETFs, the StreetTracks Gold Trust ETF was little changed at $66.66 and the iShares Silver Trust ETF was down 0.1% at $131.80. The Market Vectors-Gold Miners ETF added 2.1% to $40.16.