Gold News & Info

Source: CBS.Marketwatch

San Francisco— Investors said they expected China's revaluation of the yuan to increase demand for dollar-denominated commodities.

Moreover, Thursday's bombing incidents in London made financial markets jittery, helping strengthen demand for precious metals.

At week's end, investors were "in denial over [Thursday's] devaluation of the U.S. dollar by the People's Bank of China," said Ned Schmidt, editor of the Value View Gold Report.

"With China in the process of ascending to the top levels of the global monetary pyramid, the U.S. dollar will continue fading in importance," he said. And a weaker dollar usually spurs investment demand for gold, which is traded in dollars.

All in all, "investors should use these quiet periods of summer, when gold and silver prices are weak, to buy," Schmidt said.

Gold for August delivery closed at $425.10 an ounce, down 60 cents for the New York Mercantile Exchange session. For the week, prices for the contract climbed $3.80, or 0.9%. They closed on Thursday at their highest level since July 12.

Meanwhile, September silver fell 2 cents to close at $7.115 an ounce, but that's after ending Thursday at a three-week high. A week ago, the contract closed just under $7.

"What a difference a week makes as the gold market looks to leave this week in a 180-degree sentiment shift when compared to last week," Nell Sloane, analyst at NSFutures.com, wrote in her daily commentary.

Last week, gold was "fearful of a rising dollar, rising U.S. interest rates [and] slumping physical demand and had almost no flight-to-quality interest," she said.

"With the London bombings, the Fed's optimistic view on the economy and the Chinese currency change, the market has a new lease on life," she said.

Still, Sloane warned that while traders should "respect the gold market's ability to rally, we would also suggest that traders remain skeptical toward gold, as it has had trouble maintaining bullish themes and still remains in a broad sweeping downtrend pattern since it hit the December 2004 highs."

Other metals futures finished the week on a mixed note.

September palladium shed $1.75 to end the session at $195.55 an ounce, while October platinum closed at $890.60 an ounce, up $4.60, extending an $11 rise from the previous session. Both logged gains for the week.

Copper prices reached a new contract high on Nymex, with the September contract trading as high as $1.6115 a pound.

The contract closed up 3.35 cents at $1.6035 a pound after losing more than 2 cents on Thursday. It marked a 2.7% rally from last Friday's close.

The stronger yuan will make imports cheaper for China, said William Adams, analyst at BaseMetals.com.

The "actual extent of the revaluation, 2.1%, is minimal and therefore is unlikely to have too much impact on trade," he said. But "now the precedent has been set, further adjustments may start to have a bigger impact, although they may be some time in coming," he added.

Tracking inventories, copper supplies were down 372 short tons at 12,912 short tons as of late Thursday, according to the Nymex. Silver stocks were up 1 million troy ounces at 107.1 million troy ounces, while gold inventories stood at 5.74 million troy ounces, unchanged from the previous session.