Daily Gold Update

Source: MarketWatch

San Francisco— Gold futures rallied Thursday to close near $705 an ounce, lifting the benchmark contract to a four-month high on the heels of strong physical demand for the metal overseas, safe-haven buying and a weaker U.S. dollar as traders worried about the influence of high oil prices on the economy. Gold for December delivery rose $13.90, or 2%, to close at $704.60 an ounce on the New York Mercantile Exchange. It touched an intraday high of $707. The contract hasn't seen levels this high since early May.

"A teetering U.S. dollar, the ability to absorb all the gold thrown at it by shorts trying to cap the market and the fact we're now entering its strongest seasonally favorable period, have all combined to set us up for a near perfect storm that should take us over the psychological $700 barrier," said Peter Grandich, editor of the Grandich Letter, in emailed comments. See full story.