Source: CBS.Marketwatch
San Francisco— Gold futures closed higher Wednesday for the first time in four sessions, lifting key indexes for the sector to multiweek highs.
Gold for August delivery climbed 90 cents to end at $438.60 an ounce on the New York Mercantile Exchange. They had traded at a two-week low of $436.20 earlier. Gold lost $5.50 in the prior three sessions.
"The metal has since recovered with bargain-hunter interest being seen from [Commodity Exchange] traders," said James Moore, analyst at TheBullionDesk.com, in an e-mail update. "Further consolidation is still likely with the dollar holding firm and oil prices easing."
The greenback climbed against the yen and held a slim gain against the euro Wednesday.
Then again, "further tightness in the oil sector could prompt those looking for an anti-inflationary investment to enter the gold market," added Moore.
For now, he sees initial support around $430 to $432 and at $425 to $428 on the downside. "Some resistance is expected back towards $438," he said.
Traders also are wary of an expected change to U.S. interest rates. The Federal Reserve, which will wrap up a two-day meeting on Thursday, is expected to raise U.S. rates to 3.25% from 3%.
Seasonal view
Seasonally, gold "usually 'peaks out' right about here," said John Stafford, editor of Stafford's Investment Strategy Letter.
If the precious metal stops "at or near the old highs, we should see a normal summer decline/correction," he added. But if it "blows right through them, we may have a 'short squeeze' that would take gold $30-plus higher."
$500 gold?
Either way, "$500 is the real target … regardless of the timing," said Stafford.
Dale Doelling, chief market technician at Trend In Commodities believes that overall, gold market is headed for higher ground.
"I'm sticking with my opinion that gold will be at $500-plus sometime in 2005," he said.
Doelling expects the euro "to hold [the] lows from last August and … it's trying hard to form a base here." That should "give gold all the impetus it needs to hit my target," he added.
Other metals futures closed mixed on the exchange Wednesday. September copper added 0.8 cents to close at $1.562 a pound and July platinum added $3.70 to close at $889.30. July silver shed 3.9 cents to end at $7.057 an ounce and September palladium dipped 90 cents to end at $184.15.
Tracking inventories, copper supplies were down 96 short tons at 15,270 short tons as of late Tuesday, according to Nymex. Silver stocks were up 1.2 million at 104 million troy ounces, while gold inventories stood at 5.7 million troy ounces, unchanged from the previous session.
Sector trackers at multi-week highs
Indexes tracking the mining sector gained Wednesday to trade at multiweek highs, mirroring the fresh strength in gold.
The Philadelphia Gold/Silver Index traded as high a 94.32, its highest since April 7. It was last at 94.22, up 3.4%. The CBOE Gold Index added 3.5% to 83.79 — a level not seen since late March.
The Amex Gold Bugs Index tacked on 4% to 202.12, its highest since June 20.
Among the bigger gainers, shares of Coeur d'Alene Mines climbed $3.61, up 19 cents, or 5.6%, and Bema Gold's stock added 13 cents, or 5.7%, to $2.42.
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