Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures rose Thursday afternoon to trade above $600 an ounce, ready to tally a three-session gain of more than 2% as weakness in the U.S. dollar, following the Federal Reserve's decision to leave interest rates unchanged, prompted the precious metal's return as a defensive investment measure.

"The precious metal remains in its well-entrenched comfort channel (from $570 to $605) and is merely reacting to the ebb and flow of funds into equities, currencies, and other commodities," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.

Gold for December delivery was last up $7.40 at $598.20 an ounce on the New York Mercantile Exchange, after trading as high as $601.50, the loftiest intraday level since Friday. The contract extended gains booked late Wednesday after the Federal Reserve left interest rates on hold but continued to highlight inflation pressures in the economy. It's gained nearly $8 in the past two sessions.

"A steadier oil price, a retreating U.S. dollar and Iran/Iraq geopolitical concerns moving back towards the front page" — all "are allowing gold to once again test key resistance between $600 [and] $610," said Peter Grandich, editor of the Grandich Letter. "It appears only a question of when, not if, it breaks out to the upside."

The dollar fell to an almost three-week low against he euro Thursday, continuing to respond to the Federal Reserve's announcement.

Crude futures fell, but held their ground mostly above the $61-a-barrel level. Prices gained more than $2 on Wednesday on a surprise fall in U.S. crude inventories.

Other metals followed gold higher. December silver futures were up 34 cents at $12.23 an ounce, January platinum added $11, or 1%, to $1,080 an ounce and December palladium rose 40 cents to $323.50 an ounce. December copper shed 1.95 cents to $3.385 a pound.

On the supply side, gold inventories were unchanged at 7.57 million troy ounces as of late Wednesday, according to Nymex data.

Silver inventories rose by 227,183 troy ounces to 105.3 million and copper supplies rose by 174 short tons to 23,104 short tons.

In equities, metals-mining shares headed lower, with the Philadelphia Gold and Silver Index at 133.85 and the Amex Gold Bugs Index at 313.79, each losing 0.7%. The CBOE Gold Index was down 0.5% at 138.14.

The DJ Wilshire Nonferrous Metals Index was at 5,065.08, down 0.2%. The DJ Wilshire Industrial Metals Index was down 0.7% at 3,025.56 and the DJ Wilshire General Mining Index fell to 1,328.54, losing 0.9% from the previous session.