Weakness in the U.S. stock market attracted risk-averse investors to the gold market Friday, setting the precious metal up to end the week on a positive note. Gold-related equities also gained.
"Gold has fallen back to the level where physical demand is supporting the market, which is a good indication that the risk premium has mostly, if not entirely, left the market," UBS Warburg analyst John Reade told clients.
He believes the short-term direction for gold will take its cue from the currency markets, while the longer-term outlook is "uncertain and will remain so" until the outcome of the Iraq conflict comes into focus.
Gold for April delivery, after trading as high as $332.30 on the New York Mercantile Exchange, stood lately at $330.20 an ounce, up $1.80. This placed the benchmark contract at a level higher than the week-ago close of $326.10 but lower than the $336.60 seen two weeks ago.
Aside from war developments, there hasn't been a lot of solid news driving gold one way or the other lately, said Todd Hultman, president of commodity information provider Dailyfutures.com.
But prices "may be vulnerable to a fall when coalition forces capture Baghdad," Hultman said.
In the equities arena, shares of most metals stocks traded higher. Shares of Newmont Mining, which reported better-than-expected fourth-quarter earnings before the bell, were among the gainers.
Newmont (NEM: news, chart, profile) posted earnings of $75.1 million, or 19 cents per share, up from its year-ago profit of $18.4 million, or 10 cents. The latest profit came in a penny ahead of the average estimate of analysts polled by Thomson First Call.
The Denver-based firm said higher realized gold prices resulted in earnings of $154.3 million for 2002. In the fourth quarter, the company saw a 57 percent increase in equity gold ounces sold at a higher realized price of $328 an ounce.
Newmont's shares tacked on 55 cents to stand at $25.11.
Tracking the sector as a while, the Philadelphia Gold & Silver Index ($XAU: news, chart, profile) climbed 1 percent to 62.84, the CBOE Gold Index ($GOX: news, chart, profile) rose nearly 1 percent to 51.23, and the Amex Gold Bugs Index (HUI: news, chart, profile) gained by 0.1 percent to stand at 114.41.
Among index components, shares of Placer Dome Gold (PDG: news, chart, profile) traded at $9.24, up 14 cents, while Agnico-Eagle Mines (AEM: news, chart, profile) added 26 cents to $11.87. Freeport-McMoRan Copper & Gold (FCX: news, chart, profile) also rose, adding 3 cents to $16.45, and Barrick Gold (ABX: news, chart, profile) traded at $14.87, up 26 cents.
Elsewhere, Stillwater Mining (SWC: news, chart, profile) traded at $2.41, down 7 cents, while Inco Ltd. (N: news, chart, profile) traded up 35 cents at $18.35. Before the bell, Inco announced plans to spend $665 million to redeem convertible debt and preferred stock.
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