Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures reversed course late in Wednesday's session to close lower, taking their cue from weakness in oil prices, which tends to ease investment demand for the precious metal.

Gold prices haven't climbed past the $600 level in more than two weeks with little in the backdrop to spur buying.

"Resistance has proved extremely strong ahead of $600 and the market is likely to need either oil to make a substantial move back above $60/barrel, or the return of dollar bears before this can be achieved," James Moore, an analyst at TheBullionDesk.com, wrote in a report for clients.

For now, "rallies will continue to be used as selling opportunities with resistance seen from $600 to $608, which is my upside breakout level," he said.

Gold for December delivery closed down 90 cents at $592.60 an ounce on the New York Mercantile Exchange, after rising as high as $598. The contract, which lost $5 on Tuesday, hasn't touched $600 since Oct. 2.

December silver rose by 4 cents to close at $11.82 an ounce, following a loss of 20 cents in the previous session.

"In the absence of fresh bullish motivating factors, bullion traders and private investors keep pondering the other side of the proverbial (gold) coin and are factoring in the possibility of a drop to the other extreme — $540," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.

"Opinion is still divided, thus the arm-wrestling between the purely technicals-driven speculators and fundamentals-focused investors continues unabated," he said.

In foreign exchange, the U.S. dollar rose slightly against its major rivals after data showed headline consumer inflation cooling in September. Energy prices saw their biggest decline in almost a year but core inflation climbed for a third consecutive month.

Meanwhile, crude futures fell, likely putting pressure on gold because of easing economic worries about high energy costs. November crude retreated from an earlier high above $59 a barrel.

Elsewhere in the metals market, January platinum added $10.10 to close at $1,093.10 and December palladium rose $12.90 to end at $332.50 an ounce. December copper closed unchanged at $3.496 a pound.

On the supply side, copper supplies fell by 331 short tons to 22,299 short tons as of late Tuesday, according to New York Mercantile Exchange data. Gold inventories were down 32,090 troy ounces at 7.73 million troy ounces. Silver inventories climbed by 263,328 troy ounces to 105.5 million troy ounces.

In equities, metals-mining shares traded mostly lower after the Dow Jones Industrial Average pared gains. See Market Snapshot.

Among sector benchmarks, the Philadelphia Gold and Silver Index was at 126.88, down 2%. The Amex Gold Bugs Index lost 1.9% at 298.01 and the CBOE Gold Index declined 2.2% to stand at 130.10.

The DJ Wilshire Nonferrous Metals Index fell 1.6% to 4,865.34. The DJ Wilshire Industrial Metals Index was down 1.5% at 2,899.62 and the DJ Wilshire General Mining Index traded at 1,272.29, falling by 2.7%.