Gold News & Info

Source: CBS.MarketWatch.com

San Francisco— Gold futures closed at their highest level in two weeks Wednesday, lifted by news that Japan may decide to boost the amount of gold it holds in its reserves.

Shares of metals mining traded near the session's lows after the Federal Reserve's decision to keep interest rates unchanged at 1 percent. Futures trading closed ahead of the announcement.

Gold for February delivery climbed $4.50 to close at $414.60 an ounce on the New York Mercantile Exchange — its highest close since Jan. 14. Prices climbed $3.40 on Tuesday.

Japan will "carefully consider whether to change the composition of its $637 billion foreign reserves, including its weighting in gold," wrote Alan Williamson, an analyst at HSBC in London, in a report citing comments from Sadakazu Tanigaki, Japan's finance minister.

Japan currently has 765 metric tons of gold, or 1.5 percent of its total foreign reserves, said John Reade, an analyst at UBS in London, in a separate report.

"If Japan were to increase this to bring their holdings into the 10 percent average of central banks, this would mean a purchase of around 4,300 metric tons of gold — nearly two years of mine supply," he said.

But while Reade said he believes the news that Japan is examining the quantity of gold in its reserves is potentially a very important story," it's probably one that's geared more to the "longer-term rather than a factor to immediately move the price."

Taking some luster away from the investment value of gold, the dollar was broadly higher Wednesday amid wide speculation the Bank of Japan intervened as the yen neared a three-year high against the U.S. currency.

Among them, the Federal Open Market Committee decision, announced after the metals trading session closed Wednesday, left interest rates unchanged at a 45-year low.

Ahead of the announcement, Person said "if the Fed contends the economy is still not out of the woods, this will lead investors to believe rates will remain at this level for a longer period of time." He noted that those type of comments would in turn, put additional pressure on the dollar's weakness and provide more supportive for gold.

Federal Reserve officials offered a mixed view instead, saying the U.S. economy is gaining undeniable strength, but U.S. interest rates will remain low while the labor market catches up.

The Group of Seven meeting that begins on Feb. 6 will also be "a topic of debate on the fate of the dollar," Person said.

"Then on Feb. 11th, Alan Greenspan testifies on capital hill in the semi annual Humphrey Hawkins testimony on the state of the economy," he said.

Back on Nymex, March copper closed at $1.1325, up 1.85 cents.

Traders lifted prices after the Commerce Department said a record number of new homes were sold in the United States in 2003.

March silver closed up 7.5 cents at $6.63 per ounce.

The March palladium contract closed at $248.40 an ounce, up $4.40. April platinum fell $4 to end the session at $850.10 an ounce.

On the supply end, copper supplies were down 1,326 short tons at 265,633 short tons as of late Tuesday, according to Nymex. Silver stocks were up 65,017 troy ounces at 124.9 million troy ounces.

Gold inventories stood at 3.51 million troy ounces, up 59,337 troy ounces.