Daily Gold Update

Source: Marketwatch.com

San Francisco— Gold futures climbed back above $510 an ounce Thursday following a two-session decline that subtracted more than $20 an ounce from the metal's value.

"After reaching its most overbought condition in years at the beginning of this week, gold has now worked off most of the excess speculation," said Peter Grandich, editor of the Grandich Letter.

"This is very bullish as a pullback to former key multi-decade resistance in the $500 area is normal and just part of the two steps up, one step down, rise gold has gone through since 2001," he said.

Gold for February delivery was up 90 cents to stand at $510.40 an ounce on the New York Mercantile Exchange. The contract, which touched a more than 25-year high of $543 on Monday, fell a total of $22 on Tuesday and Wednesday.

Prices tested the 20-day moving average this morning, said Dale Doelling, chief market technician at Trends In Commodities. "If gold manages to hold here, then the market could just turn and make new highs before the year ends."

But gold could also "pull the entire metals complex lower if it manages to log consecutive closes below the $500 mark," he said. "If that were to happen, we could be in for an ugly end to — what so far has been — a stellar year for these markets."

Gold prices fell Wednesday as traders continued to digest the change in the wording of the Federal Reserve's policy statement accompanying its 13th consecutive interest-rate increase.

The central bank's Federal Open Market Committee removed language from its explanatory statement Tuesday that had judged interest rates to be "accommodative," or stimulating economic growth.

Elsewhere in the metals complex, March silver tacked on 17 cents to trade at $8.635 an ounce and March copper added 1.35 cents to $1.983 a pound.

Copper "remains an accident waiting to happen, and I fully expect carnage for the bulls before its all over," said newsletter editor Grandich. The December contract climbed to an all-time high near $2.20 this month.

Rounding out the metals action Thursday, January platinum traded down $5.30 at $963 an ounce, while March palladium was up $3.20 at $268 an ounce.

On the supply side, inventories of copper were unchanged at 3,681 short tons as of late Wednesday, according to Nymex. Silver supplies were down 1.2 million at 117.6 million troy ounces and gold was flat at 6.68 million troy ounces.