Gold Futures Head Lower

"The reduction was mostly attributable to lower oil prices," says Peter Morici, an economist at the University of Maryland's business school. "The deficit will be up again soon because oil prices have reversed. It likely won't have much lasting effect on the dollar."

Reaction to the data among foreign-exchange traders was muted, with one dollar buying 116.81 yen, up slightly from 116.36 yen the prior day. Euros were changing hands for $1.3225, up from $1.3192 previously. Over time, the value of gold and that of the dollar tend to move inversely with each other.

Back in gold, the precious metals team at Merrill Lynch in Toronto upped its gold price forecast by $25 to $675 an ounce for 2008 based on a revision of supply and demand fundamentals. But longer term, a decline to around $550 an ounce is expected.

Merrill also raised its rating on shares of Kinross Gold(KGC Quote) to buy from neutral, boosting the stock 0.2% in recent action.

Elsewhere, shares of Agnico-Eagle Mines(AEM Quote) were ahead by 0.2%, while those of Barrick Gold(ABX Quote) were up 0.6%.

As for base metals, copper contracts closed virtually unchanged at $2.83 a pound on the Comex.