Daily Gold Update

Source: MarketWatch

New York— Gold futures reversed losses Friday, closing up more than 2% on speculation that the precious metal, losing more than $190 in the previous 11 sessions, has been oversold. Copper and other metals, however, ended mostly lower. Gold had fallen in 10 out of the past 11 sessions since Oct. 8 on fund liquidation and a firmer dollar. It dropped to $681 earlier Friday, the lowest level since September, 2007. "Gold's sell-offs have been sharp and brutal and it is clearly very oversold," said Mark O'Byrne, executive director at Gold and Silver investment. Gold for December delivery closed up $15.60, or 2.2%, at $730.30 an ounce on the Comex division of the New York Mercantile Exchange. Despite the gain, the metal fell 7.3% this week.

Gold's earlier losses came amid sharp declines in global stock markets. Similarly, crude-oil futures slumped more than 5% as OPEC's production cuts failed to offset concerns that the global economic slowdown is dampening oil demand. Gold is often seen as an investment safe haven for which prices tend to rise when the economy gets into trouble, but its recent slump has defied conventional wisdom. Analysts pointed to fund liquidation and a sharply rising U.S. dollar as major reasons for the drop in gold prices. The metal is "still fighting the deleveraging holocaust but as soon as this alleviates, it has significant room to rally," said Peter Spina, president of GoldSeek.com. "The upside risks are considerably higher than downside risks." See full story.