Daily Gold Update

Source: Marketwatch

San Francisco— Gold futures overcame a muted floor-trading start to rally 1.5% on Thursday, trading above $1,340 an ounce and erasing the previous session�s losses. Gold for December delivery rose $19.40 to $1,342.10 an ounce on the Comex division of the New York Mercantile Exchange. That was gold�s highest settlement in a week, and it contrasts with losses of 1.2% Wednesday, when the December contract closed at its lowest in three weeks. Thursday�s rally �is really a testament to the ability of gold to come back,� said Jim Steel, an analyst with HSBC in New York.

The dollar strengthened Wednesday following fears the Federal Reserve will not spend as much buying bonds as some on Wall Street expected. The Fed is scheduled to hold a two-day policy meeting next week. Investors thought Wednesday�s losses were overdone and were catching up with gold on Thursday, Steel said. �People are feeling we�re still going to get quantitative easing no matter what,� he added. Monetary easing is seen as inflationary and a big negative for the dollar, which plays right into two of gold�s strengths � wealth protection and a negative correlation with the U.S. currency. See full story.