Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures fell as much as $10 an ounce Tuesday morning, surrendering gains made in the prior session after North Korea said it has tested a nuclear weapon, as oil prices fell and the dollar strengthened against major rivals.

"The precious-metals complex continues to chop around with December gold well below the $600 level as all attempts to rally are met with renewed selling," said Dale Doelling, chief market technician at Trends In Commodities.

"So, as volatility dries up this choppy market action will likely result in a bigger than normal move, one way or the other, down the road," he said.

Gold for December delivery was last down $8.30 at $574.50 an ounce on the New York Mercantile Exchange after falling to a low of $573.

The contract added more than $5 Monday as North Korea's move sparked some safe-haven buying, although traders said even that news was not enough to fully dispel the negative tone in the metals sector.

The rally "was the deadest of dead cat bounces, proving that if something is thrown down hard enough, it will bounce… however modestly," said Dennis Gartman, editor of The Gartman Letter.

James Moore, analyst at TheBullionDesk.com, said he expects gold to continue to meet resistance any time it attempts a rally, given its recent trend. The metal lost $27 of its value last week against a background of weak oil prices and dollar strength.

A decision by the Organization of the Petroleum Exporting Countries to cut production and seasonally-strong physical buying of gold would help limit further weakness, "although I think a further shake out of longs back to $553 is required before gold finds a base," he said.

At last check, crude futures fell as traders continued to look for some clarity from OPEC on its plans to cut output after several days of mixed messages from officials.

And the dollar climbed to multi-month highs against the yen and euro on diminishing expectations of a Federal Reserve interest rate cut soon and as traders flocked to the U.S. currency for safety on concerns over North Korea's nuclear ambitions.

Weakness in oil and strength in the dollar tend to ease safe-haven demand for gold.

Other metals followed gold prices lower. December silver futures were down 19 cents at $11.23 an ounce. January platinum lost $19.90 to $1,075 an ounce and December palladium dipped $5.25 to $298 an ounce. December copper declined 4.05 cents to $3.3725 a pound.

On the supply side, gold stocks were down 32,033 troy ounces at 7.86 million troy ounces as of late Monday, according to Nymex data. Silver supplies rose by 4,808 troy ounces to 105.2 million and copper supplies fell by 394 short tons to 21,198 short tons.

Among equity indexes tracking the metals and mining sector, the DJ Wilshire Nonferrous Metals index traded down by 0.2% at 4,373.06, the DJ Wilshire Industrial Metals index fell by 0.1% at 2,777.36 and the DJ Wilshire General Mining index traded at 1,208.91, down 0.6%.