Gold Inches Ahead

However, Tuesday's downward revisions to growth forecasts by the White House shows the economy is still slowing down and will likely continue to do so. The new projections call for growth in 2007 of 2.9%, down from 3.6% forecast in June.

"We're seeing stronger evidence that a hard landing or recession for the overall economy can be avoided," says Lakshman Achuthan, managing director at ECRI in Manhattan. "We are aware of some pronounced weakness in the industrial sector," but strong services could actually outweigh that factor.

A soft landing, if combined with low inflation, could mean that the Federal Reserve can take its foot off the brake pedal and reduce short-term interest rates. The anticipation of such a move could weaken the greenback and possibly propel gold prices higher. Bullion prices tend to move inversely with changes in the value of the U.S. currency, which was recently trading at 116.74 yen, down from 117.80 late Tuesday. The euro hit a five-month high Wednesday and was recently trading at $1.2983 vs. $1.2849.

Among the miners, HSBC Securities blessed Gold Fields(GFI Quote) with an overweight rating, up from neutral, while Canaccord Adams upped its rating on Goldcorp(GG Quote) to buy from hold.

Friedman Billings Ramsey boosted its rating on Freeport McMoRan Copper & Gold(FCX Quote) to outperform from market perform and increased its price target to $74 a share from $57. Meanwhile, Credit Suisse speculated that BHP Billiton (BHP Quote) might be interested in acquiring Freeport McMoran, which earlier this week announced a deal to acquire Phelps Dodge (PD Quote).

In base metals, March-dated Comex copper contracts closed off a 1.15 cents at $3.136 a pound, with declining demand continuing to weigh down on prices.

The U.K.-based World Bureau of Metal Statistics issued a report estimating that the copper market surplus reached 228,000 tons in the first nine months of the year, more than double the 88,000-ton total for the year through August.

Elsewhere, Matrix Research bumped up its rating on Century Aluminum(CENX Quote) to strong buy from buy, helping boost the stock, which was up 2.3% recently.