Modest Advance for Gold Futures

Updated from 3:10 p.m. EST

Gold prices edged higher Wednesday, but speculative buyers likely remained on the sidelines, waiting for confirmation of a potential new uptrend.

Contracts for April delivery of bullion added $6.70 to close at $652.90 an ounce on the Comex division of the New York Mercantile Exchange. The bullion exchange-traded funds, iShares Comex Gold Trust (IAU Quote) and streetTracks Gold Shares(GLD Quote), were rising about 0.5% recently.

"I think hot money will eventually pour right back in just like it fell out last week," says Carlos Sanchez, an analyst at New York-based specialty consulting firm CPM Group.

Spot prices flirted with the $690 level last week before retreating rapidly as speculators dumped bullion after volatility in the equity markets sparked a flight to cash.

But the same factors that made gold attractive prior to last week -- fears about the strength of the economy and worries about rising inflation -- still remain in evidence and will likely lure investors back to gold, says Sanchez.

Before all that happens, there could be another dip, if what one chart watcher says proves correct.

"Gold feels kind of heavy here," says Rich Ishida, president of Pasadena, Calif.-based MarketVane, a market-sentiment polling organization. "Before the hesitant bulls become confirmed bulls, they will want to see if support holds."