Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures closed lower Friday, retreating from the previous session's intraday move to an eight-week high, but the precious metal chalked up a gain for the week.

Gold has been "rising initially from a technical point of view, but largely because of recent de-hedging, and lower-than-needed supply to satisfy slowly growing demand from traditional sources, including India," said Julian Phillips, an analyst at GoldForecaster.com.

"At $650, this demand should pause as the higher price levels are digested," he said.

Gold for February delivery closed down $3.40 at $644.70 an ounce on the New York Mercantile Exchange. Still, it finished the week 1.3%, or $8.30, higher after closing last Friday at $636.40.

On Thursday, gold futures touched their highest level in two months, at one point breaking through a key resistance level at $650 an ounce. Still, the metal closed weaker as oil prices eased.

"The first stab at $655 was indeed met with resistance," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.

"Bullion has been on the mend since Jan. 8, and each stage of the rebound from $608.30 has been methodically tested," he said in e-mailed comments. But "the market does find itself in a close-to-overbought condition and is shedding some momentum."

James Moore of TheBullionDesk.com believes there remains upside potential for gold, however.

"Although a period of consolidation around the current levels would be healthy for the longevity of the current rally, gold still has plenty of room on the charts before running into overbought territory," he said in a morning note.

At the same time, gold remains vulnerable in the short term to price fluctuations in the oil sector, Moore said.

In the energy pits Friday, oil prices rose and were ready to end higher for the week, driven by strength in heating fuels as temperatures in the Northeast plunged. Concerns about growing tensions in the Middle East added support.

Also affecting gold prices, the dollar rose against the euro and the British pound after U.S. durable-goods orders for December showed strength.

Orders for durable goods jumped by 3.1% in December, the Commerce Department said. The gain was in line with economists' expectations of a 3.5% gain, after factoring in a revision to data for November's orders for big-ticket items.

Overall, "the worry about the future of the dollar is steadily growing, leading to a climate of uncertainty which will inevitably lead to gold being bought," said Phillips.

Also on Nymex Friday, other metals finished lower. March silver dropped 11.5 cents to close at $13.375 an ounce, but it's ended 3.5% higher for the week.

April platinum declined $6.50 to close at $1,181.50 an ounce, with March palladium falling $4.50 to end at $350.95 an ounce. Both contracts ended higher than last Friday's close.

March copper futures fell by 1.75 cents to close at $2.6337 a pound. After gaining 2% on Thursday, the copper contract's finished 4.8% above its week-ago close.

On the supply side, gold inventories were unchanged at 7.46 million troy ounces as of late Thursday, according to Nymex data. Silver supplies rose 597,554 troy ounces to stand at 114.76 million troy ounces, while copper stockpiles were unchanged at 36,410 short tons.

In equities trading Friday, the main benchmarks tracking metals and mining stocks traded on a mixed note, reflecting the session's weakness in metals futures, but also the overall strength in the metals for the week.

The Philadelphia Gold and Silver Index was at 138.24 and the CBOE Gold Index fell to 144.38, with both benchmarks losing 0.2%. The Amex Gold Bugs declined by 0.1% to stand at 330.77.

The DJ Wilshire Nonferrous Metals Index was up 0.2% at 6,080.61 and the DJ Wilshire Industrial Metals Index climbed 0.3% to stand at 3,476.56. But the DJ Wilshire General Mining Index shed 0.7% to 1,321.02.