Gold Bucks Up

Investors thinking that gold would follow oil lower got a surprise Monday as the bulls took over and sent bullion prices higher.

While nearby crude futures were sinking $2.17 at $58.58 a barrel on the New York Mercantile Exchange, gold prices spurted upward, breaking what some have seen as a pattern of prices for the two commodities tending to move in step. Contracts for December delivery of gold closed up $6.40 at $607.40 an ounce also on the Nymex, and the bullion exchange-traded funds followed suit, with iShares Comex Gold Trust and streetTracks Gold Shares both gaining about 1% recently.

Friday's close above the psychologically important $600-an-ounce level had helped boost sentiment when the Far Eastern markets opened overnight, and an intraday rally seemed to feed on itself.

"With the Asian trade lifting gold prices in the face of numerous bearish outside-market developments, it would seem like the trade has returned to the idea that physical buying will generally support prices," writes Ben Mancha, an analyst at NS Futures in Chicago.

One of those other bearish factors for gold was the dollar, which was mixed against the major currencies. The price of gold tends to sink when the U.S. currency is strong, but the relationship didn't hold Monday. Instead, while bullion was jumping, the greenback was gaining against the euro, which was trading at $1.2726 recently vs. $1.2735 late Friday. The greenback was, however, losing slightly against the yen, buying 117.42 yen vs. 117.58 yen previously.