Daily Gold Update

Source: MarketWatch

San Francisco— Gold futures rose Thursday, supported by a solid performance on international stock markets and strength on Wall Street, but a rise in the U.S. dollar curbed the metal's climb.

"We received our expected bounce/reversal and that was the easy short-term call," said Peter Spina, chief investment strategist at GoldSeek.com. "Now we will watch in the coming sessions if these gains can extend."

He said he believes "this momentum will continue to take us back to the upper $600s." But for now, "a move past $655 is the first step before moving back up to the $675 resistance area."

"There will be difficulty short-term if we find this reversal take a breather, and a period of consolidation may be needed before we can expect the next leg higher in gold to begin," he said in e-mailed comments.

Gold for April delivery was last up $1.60 at $654.50 an ounce on the New York Mercantile Exchange. It traded at a one-week, intraday high of $657.50 earlier in the session.

Economic data due Friday include U.S. trade deficit numbers, non-farm payrolls and the unemployment rate for February.

"Any one of these reports coming in below expectations can have a significant impact on the dollar strength, in turn helping make gold and silver attractive investments," said Neal Ryan, director of economic research at Blanchard, in an e-mailed note to clients.

On the currency markets, the dollar rose against major counterparts, putting some pressure on gold prices. The euro fell against the dollar after the European Central Bank raised its key interest rate by a quarter-percentage point to 3.75%.

The yen tumbled against the dollar and other higher-yielding currencies amid market talk of renewed interest in carry trades, or the practice of borrowing or selling low-yielding currencies, such as the yen and the Swiss franc, and reinvesting in higher-return currencies and assets.

On Wednesday, gold futures had closed up 1%, or $6.70, at $652.90 an ounce. The contract has climbed $13.70 in two sessions, after breaking a five-session losing streak that drew down prices by more than $50.

"Sentiment has improved dramatically across the metals spectrum in the past 24 hours through a combination of fundamentals and external factors such as the dollar and oil," said James Moore, an analyst at TheBullionDesk.com.

It still remains to be seen whether the recovery is sustainable; however, if prices manage to stabilize above $656, the market might rise sharply, boosted by funds building fresh long positions, Moore said, in e-mailed commentary.

U.S. stocks rallied, boosted by the overseas gains. See Market Snapshot. Most Asian stock markets closed higher on Thursday, with indexes in Japan, Hong Kong, and China all rising.

"Overall, the next few days are likely to be nervous as the [metals] market digests why the recent sell-off rippled through so many markets and what it was telling us," said William Adams, an analyst at BaseMetals.com.

"The market will be more reactive to poor economic data and as such Friday's employment data is likely to be watched closely," Adams said, in an e-mailed research note. "Indeed the market may go into consolidation ahead of that."

Other metals prices also rose. May silver was last up 4.5 cents at $13.15 an ounce. April platinum rose $12.50 at $1,205 an ounce and June palladium added $1.75 at $355.50 an ounce. May copper rose 2.4%, or 6.8 cents, to trade at $2.85 a pound.

Elsewhere on the commodity markets, crude-oil futures edged lower Thursday as traders digested the prior session's almost 2% gain. But natural-gas futures touched their lowest level in a week with the market still convinced that overall U.S. supplies will end the winter at comfortable levels.

On the supply side, gold inventories were unchanged at 7.49 million troy ounces and copper supplies were unchanged at 36,994 short tons as of late Tuesday, according to New York Mercantile Exchange data. Silver supplies rose 574,129 troy ounces to stand at 118.2 million troy ounces as of late Wednesday.

Indexes tracking the metals sector rose on Thursday. The Philadelphia Gold and Silver Index rose 1% at 133.95 points. The Amex Gold Bugs Index added 1.3% at 333.63 points and the CBOE Gold Index rose 1.2% at 139.66 points.

Metals exchange-traded funds also posted gains. The StreetTracks Gold Trust ETF rose to $64.73 and the iShares Silver Trust ETF was at $129.87, with both up 0.7%. The Market Vectors-Gold Miners ETF added 1.1% at $38.52.