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Gold Futures Eke Out Gain

Simon Constable

Gold prices struggled to find direction in a choppy trading session Thursday but eventually closed higher, despite another up day for the greenback.

February-dated contracts added 50 cents to finish at $613.90 an ounce on the Comex division of the Nymex. The exchange-traded funds that hold bullion, iShares Comex Gold Trust (IAU Quote) and streetTracks Gold Shares (GLD Quote), were little changed.

"It's quite dispiriting to see it bounce around like this," says Matt Turner, a commodities analyst at Virtual Metals in London. "The impact of the stronger dollar on gold has been more marked because everyone was expecting a weaker dollar."

The newly published January edition of the Fortis metals monthly, produced by Virtual Metals, is forecasting that gold will hit $640 in 12 months, but then fall back to $550 in two years.

Much of the shorter-term opinion is being driven by the expected softness in the U.S. currency, which tends to move inversely in value against gold. But for now at least, things don't seem to be working out that way.

Helping boost the dollar Thursday was another piece of positive economic news. The Labor Department said new claims for unemployment fell to 299,000 last week, lower than the consensus forecast of 320,000. The revised figure for the prior week totaled 325,000.

"The data fit with last week's stronger-than-expected payrolls figures, further dissipating the notion of a first-quarter [Federal Reserve rate] cut," writes Ashraf Laidi, chief foreign-exchange analyst at CMC Markets, in a market brief.

The increasingly rosy picture for the U.S. economy, and the prospect of fed funds rates staying at 5.25%, helped lift the U.S. currency. One dollar was recently buying 120.47 yen, up from 119.62 yen late Wednesday. The euro was trading at $1.29, down from $1.2938 previously.

In the gold patch, Prudential upgraded shares of AngloGold Ashanti(AU Quote) to overweight from neutral and raised its stock price target to $50 from $37. The stock gained 1.3% to $44.39.

The Amex Gold Bugs Index climbed 0.2%, with shares of component company Meridian Gold(MDG Quote) up 2.5%.

Turning to base metals, copper contracts closed down half a cent at $2.659 a pound on the Comex.

Shares of diversified metals miners Rio Tinto(RTP Quote) and CVRD(RIO Quote) were up 2.5% and 1.7%, respectively.