Gold Inches Ahead

Gold inched higher Wednesday, but investors seemed unwilling to commit to new positions ahead of the Thanksgiving holiday.

February-dated bullion contracts closed up 30 cents at $635.40 an ounce on the Comex division of the Nymex, while contracts for December delivery closed at $629, also up 30 cents. By the end of the session, open interest on the February contract reached 11.9 million ounces, surpassing the 11.6 million ounce total for December positions. The later-dated contract now becomes the futures market benchmark.

Prices are being largely driven by professional investors who don't seem to want to enlarge positions ahead of the holiday weekend, says Bernard Hunter, director of precious metals at bullion bank ScotiaMocatta in Toronto.

Meanwhile, retail investors are likely very cognizant that the gold market has gone "off the boil" since retreating from a multiyear high of $725.25 in mid-May, and may be unwilling to jump back in until some sizzle returns, Hunter says. In addition, buyers of the physical metal such as jewelry fabricators are staying away, he says, hoping to make purchases on future price dips.

On the economic front the Labor Department reported a jump in jobless claims to 321,000, last week vs. analysts forecasts of 310,000, and a revised figure of 309,000 for the prior week.

Also out in the morning was news from the Economic Cycle Research Institute that the Weekly Leading Index rose 1.6% last week, compare to an increase of 1.1% in the previous period. The move marks the third-straight week of gains, following a summer of more than a dozen consecutive declines. Combined with the unemployment data, the ECRI index seems to show a relatively healthy economy.