Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures climbed above $600 an ounce Thursday to close near a three-week high. The allure of the precious metal returned as a defensive investment in the face of strength in oil prices and weakness in the dollar.

"Gold continues to build a base after absorbing strong bouts of selling," said Peter Grandich, editor of the Grandich Letter.

"A close above $610 is needed to turn the market technically bullish again, and that appears to be only a question of when," Grandich said.

Gold for December delivery climbed $9.90 to close at $602.50 an ounce on the New York Mercantile Exchange, after rising as high as $604. The contract hadn't traded or closed above $600 since Oct. 2.

December silver rose by 34 cents, or 2.9%, to end at $12.16 an ounce.

The gold market "may be setting itself up for a broader move," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com. But "if rallies are not sustained… then the overhang of available physical gold will indeed depress gold values back towards the mid-$500s before the year draws to a close."

"We are walking on recently cooled lava here — the crust remains quite fragile, so walk slow we must," Nadler said.

In foreign exchange, the U.S. dollar fell against major rivals after data measuring future growth suggested the U.S. economy will continue to expand at a slow pace, damping expectations for further interest-rate increases.

Meanwhile, crude futures climbed on news that Saudi Arabia supports the Organization of the Petroleum Exporting Countries' plan to cut output.

Elsewhere in the metals market, January platinum rose by $1.70 to close at $1,094.80 and December palladium added $4.90 to end at $337.40 an ounce. December copper closed at $3.5095 a pound, up 1.35 cents.

On the supply side, copper supplies rose by 37 short tons to 22,336 short tons as of late Wednesday, according to New York Mercantile Exchange data. Gold inventories were down 32,051 troy ounces at 7.70 million troy ounces. Silver inventories were unchanged at 105.5 million troy ounces.

In equities, metals-mining shares traded broadly higher to mirror strength in the precious metals.

Among sector benchmarks, the Philadelphia Gold and Silver Index was at 130.97 points, up 3.1%. The Amex Gold Bugs Index added 3.3% to stand at 307.63 point and the CBOE Gold Index was at 134.76, up 3.5%.

The DJ Wilshire Nonferrous Metals Index rose 2.1% to trade at 4,996.25 points. The DJ Wilshire Industrial Metals Index was up 1.6% at 2,963.65 and the DJ Wilshire General Mining Index traded at 1,311.29, rising 2.6%.