Momentum Traders Bid Up Gold

Updated from 12:17 p.m. EST

Gold prices moved up again Thursday as nervous traders tentatively dipped back into the market.

April-dated bullion contracts tacked on $2.60 to end the session at $655.50 an ounce on the Comex division of the New York Mercantile Exchange.

The bullion exchange-traded funds streetTracks Gold Shares(GLD Quote) and iShares Comex Gold Trust (IAU Quote) were each up by about 0.2%.

Traders are playing the momentum and are looking for intraday opportunities rather than making moves to boost longer-term precious metals holdings, says Jon Nadler, an analyst at Montreal Bullion dealer Kitco.

Spot prices dropped to around $635 on Monday following a failed attempt to breach resistance at the $690 level last week. The dip was sparked by a selloff in China's stock markets last week, which sent speculators fleeing to cash while they dumped assets across the board. Since the start of this week, gold prices have recovered some of those losses.

Whether a gold bull trend resumes in earnest remains to be seen, but that a level of skepticism remains is almost certain.

"I don't think there is a perception that everything has reversed," says Nadler, who adds that at a minimum, resistance at $675 will need piercing convincingly to tempt longer-term buyers back.

On the economics front, the Labor Department reported modestly better-than-expected data on new claims for unemployment insurance. But despite the relatively benign figures, the trend is still moving higher compared with where claims were a few weeks ago.

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