Gold News & Info

Source: Marketwatch

San Francisco— Gold futures edged lower Monday, retreating from the nearly eight-week high they saw last week as gains in the U.S. dollar dulled demand for the precious metal.

Gold for June delivery was last down $2.60 at $693.20 an ounce on the New York Mercantile Exchange after a drop to $690.50.

The dollar's strength "comes on the heels of several technical forecasts that indicate some potential gains ahead — this, just when the gold bugs were getting ready to deliver its eulogies," said Jon Nadler, an analyst at Kitco Bullion Dealers.

However, gold's pulling back "despite an oil price still above $64 per barrel and the near-certainty of $4 per gallon gasoline as the summer drivers take to the road in just a few weeks," he said in e-mailed commentary.

The dollar rose slightly against European currencies Monday, continuing to rebound after hitting multiyear lows last week.

The yen found some support, edging higher against the euro, after Standard & Poor's upgraded Japan's sovereign rating to AA, a move that boosted confidence about long-term growth prospects for the world's second-largest economy.

But in the bigger picture, "the recent weakness in the dollar coupled with concerns about the U.S. economy will prompt further asset diversification in the coming sessions, with dips in gold still viewed as good buying opportunities," said James Moore, metals analyst at TheBullionDesk.com, in a note to clients.

On Friday, gold climbed 1.1%, adding $7.50 to close at $696.60 an ounce. It traded as high as $698, its strongest intraday level since Feb. 27.

"While the market is sitting just below the $700 psychological level for gold, we're more impressed by the price holding above our technical target of the $694-$695 level," said Neal Ryan, director of economic research at Blanchard and Company.

"We're heading into peak demand from the Indian wedding season," Ryan said in e-mailed commentary. "Last year we saw prices during this time period go on a nearly $130-per-ounce run in a three-week period."

Ryan predicts gold prices will continue to rally and could reach $800 by year-end.

Gold futures, for now, failed to follow crude prices higher. Higher energy prices and their potential effect on the economy usually tend to lift gold.

Concerns that violence in Nigeria, following presidential elections over the weekend, might spread to the country's oil-rich Delta region pulled oil prices closer to $65 a barrel.

Other metals prices saw mixed trading. May silver was up 2 cents at $13.975 an ounce, while July platinum fell $18.70, or 1.4%, to $1,322.50 an ounce and June palladium fell $2.45 to $385.70 an ounce.

"The platinum, silver and palladium [exchange-traded funds] heading to the market from Switzerland won't move the markets a huge amount on their own, but the key will be what kind of follow up we see in other bourses and exchanges for additional, physical-metal backed ETFs," said Blanchard's Ryan.

Chinese copper imports skyrocket

In related news, Gold and copper production at Freeport-McMoRan Copper & Gold's Grasberg mine in Indonesia is back to normal after a labor dispute was resolved over the weekend, Dow Jones Newswires reported, citing a company spokesman.

Thousands of workers stopped working last week and joined a three-day demonstration organized by a labor group representing employees from Papua, where the mine is located.

"Apparently, Freeport McMoRan agreed to double monthly salaries, while also agreeing to set up a department to handle the welfare of native Papuan workers," said Edward Meir, analyst at Man Financial.

The news has "taken a modest toll" on copper, Meir said. "The decline would probably have been worse were in not for another set of more detailed Chinese copper import demand numbers that were released overnight."

In March, China's refined copper imports hit their highest level ever with total imports totaling more than 200,000 tons, up 33% in just one month.

Meir said that the data "should keep copper well supported, and prices could very well resume their advance over the course of the week."

May copper was last up 1.95 cents at $3.63 a pound, but that's following an earlier dip to $3.59.

Inventories and indexes

On the supply side, gold warehouse stocks were unchanged at 7.6 million troy ounces as of late Friday, according to Nymex data. Silver supplies rose by 2.99 million troy ounces to stand at 131.1 million troy ounces, while copper supplies fell 171 short tons to stand at 35,187 short tons.

Indexes tracking the performance of stocks in the metals and mining sector were little changed Monday. The Amex Gold Bugs Index added 0.1% to 356.54 points, but the CBOE Gold Index fell slightly to 150.95 points and the Philadelphia Gold and Silver Index was at 143.43 points, down 0.2%.

"Perplexingly, gold equities ar