Daily Gold Update

Source: Marketwatch.com

San Francisco— Gold futures dropped almost $6 an ounce to close at their lowest level in a month Tuesday and silver ended at an seven-month low, pressured by strength in the U.S. dollar.

"The dollar's strength is having an obvious affect on the precious metals markets," said Dale Doelling, chief market technician at Trends In Commodities.

Gold for December delivery traded as low as $438.50 an ounce on the New York Mercantile Exchange, a level not seen since July 29. The contract was last at $434.90 an ounce, down $6.50, or 1.5%.

September silver traded as low as $6.63 an ounce, its lowest since Jan. 10. It was last at $6.695, down 3.5 cents.

The dollar hit three-week peaks against the yen and pushed higher against its European counterparts Tuesday, helped by weaker-than-expected Japanese economic data that covered household spending and employment.

But "this dollar rally is looking a little suspect to me" and the morning's action looked "a little frothy, so any sign of capitulation should give traders sufficient reason to begin buying gold again," he said.

"Strong physical buying and the beginning of the best seasonal period for gold should keep the retreat orderly," said Peter Grandich, editor of the Grandich Letter.

Ned Schmidt, editor of the Value View Gold Report said current trading in gold "is that of truly deluded traders."

"Oil and gasoline imports will rise – that, and consumer demand for replacement goods, will increase the trade deficit," he said. And a "higher trade deficit [is] negative for [the] dollar and positive for gold."

Given that, gold and silver are incredible buys on this misdirected selling," he said.

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