Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures erased earlier losses to turn higher Wednesday, as the precious metal tracked a surge in crude oil prices above $60 a barrel and a weaker U.S. dollar.

Meanwhile, traders remained cautious ahead of the Federal Reserve's decision on interest rates later today and accompanying outlook on inflation.

Gold for December delivery rose $3.20 to $590.80 an ounce on the New York Mercantile Exchange, after hitting a low of $582.50 earlier in the session.

The contract closed higher Tuesday for the first time in three sessions as oil prices rose on the eve of supply data.

Crude oil futures turned sharply higher after the U.S. Department of Energy reported an unexpected decline in crude supplies during the latest week. The December contract was last up $1.40 to $60.75 a barrel on NYMEX. See Futures Movers.

Meanwhile, the dollar was slightly lower against major rivals ahead of the Fed decision. Policymakers are expected to leave interest rates unchanged at 5.25% but speculation has built in the past several days that they will take a more cautious view of inflation than previously expected.

In addition, business sentiment in Germany was stronger-than-expected in September.

"Traders are likely to remains cautious ahead of the FOMC decision later today, barring a break by oil from its current $58-60 range," said James Moore, analyst at TheBullionDesk.com in London.

From a technical standpoint, gold is finding physical support during dips, while investment funds are selling into rallies, "but the short-term trend remains one of weakness with gold requiring a rally through $608 to confirm a break-out on the charts," he said.

Other metals were mixed. Silver futures advanced 10 cents to $11.950 an ounce and platinum futures rose $8.90 to $1,072.00 an ounce. Palladium slipped 50 cents to $322.50 an ounce.

On the supply side, gold inventories were down 32,009 troy ounces at 7.57 million troy ounces as of late Tuesday, according to Nymex data. Silver supplies fell by 63,857 troy ounces to 105.1 million and copper supplies rose by 279 short tons to 22,930 short tons.

In equities, metals-mining shares were mostly higher, mirroring the move in the underlying commodity. The Philadelphia Gold and Silver Index hiked up 1.5% to 132.92, the Amex Gold Bugs Index rallied 2.1% to 313.50 and the CBOE Gold Index climbed 2.2% to 137.16.