Source: Marketwatch.com
San Francisco— Gold futures rallied Thursday, spurring a close in the December contract to a nine-month high above $459 an ounce and pulling metals-mining indexes to their loftiest levels since early December.
Gold for December delivery rose $5.60 to close at $459.30 an ounce on the New York Mercantile Exchange after trading as high as $459.70. Those are levels the contract hasn't seen since the session high of $467 and close of $465.20 — both on Dec. 7 of last year.
"Gold is strong despite a recent slightly firmer paper 'dollar'," said John Stafford, editor of Stafford's Investment Strategy Letter, adding that prices are "headed to $500 and then well beyond that into the several thousands of paper 'dollars' per ounce in coming decades."
He sees higher prices for gold "because of actual physical demand, as well as in further anticipation of the longer-term price-inflationary effects of the Feds' reckless … policy-generated 'money' and bank credit 'out of thin air'."
Indeed, U.K.-based precious metals consultancy GFMS said earlier this week that gold prices should hold firm in the coming months because of "buoyant fabrication demand."
Prices should head towards $480 before the year is out, and clear the $500 hurdle sometime in the first half of 2006, GFMS said.
Digesting data
Meanwhile, Thursday's gain for gold came as financial markets digested a heavy menu of U.S. economic data, including retail-level inflation for August.
"With the economic data now on the Street, the precious metals markets are being bid higher in spite of their overbought condition and some strength in the dollar," said Dale Doelling, chief market technician at Trends in Commodities.
"This is actually a very positive sign for gold because the market is now trading on its own merits," he said.
While Doelling said he thinks the market will eventually see a retracement, for now, "all signs point to higher prices and gold looks like it may have enough momentum to reach the $465 level before experiencing a pullback."
From here, while gold "remains vulnerable to sharp but short corrections — the least resistance is up," said Peter Grandich, editor of the Grandich Letter.
Silver gains; copper dulls
Elsewhere in the metals sector, silver prices closed higher to mirror gold's move, but copper marked a third-session decline.
December silver closed up 3.3 cents at $7.078 an ounce. It touched a one-week high of $7.14 earlier.
"Silver is seriously lagging," said Ned Schmidt, editor of the Value View Gold Report, adding that "$9 silver is coming as it follows gold higher."
Meanwhile, the December copper contract fell 0.65 cent to end at $1.6045 a pound on the heels of a two-session losing streak.
December palladium tacked on $2.40 to close at $187.15 an ounce, while October platinum closed at $919.70 an ounce, up $2.20.
Tracking inventories, copper supplies were up 35 short tons at 9,667 short tones as of late Wednesday, according to Nymex. Silver stocks were unchanged at 116.8 million troy ounces, while gold inventories stood at 6 million troy ounces, also flat from the previous session.
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