Gold Ignores Dollar Strength

The metal rises modestly despite the greenback's gains.
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Gold edged higher Monday in thin trading asinvestors anticipated a softer greenback goingforward.

December-dated gold contracts were recentlytrading up $2.50 at $625 an ounce on the Comexdivision of the New York Mercantile Exchange. Openinterest for the contract now stands at 14.3 millionounces, down from 14.8 million Friday. For theFebruary-dated contract the open interest climbed to9.2 million ounces, up from 9 million. Contracts forthe latter were ahead by $3.30 at $632 an ounce. Open interest in the February contract willlikely grow over the next few sessions as Decemberdated positions are rolled forward.

The bullion exchange-traded funds were gainingalso, with

streetTracks Gold Shares

(GLD) - Get Report

and

iShares Comex GoldTrust

(IAU) - Get Report

, each up about 0.4%.

"Gold has again found good physical interest thismorning and should continue to benefit from the recentbearish sentiment towards the dollar," writes JamesMoore, an analyst at

TheBullionDesk.com

.Traders seemed unfazed by a bullish story on the dollar in

Barron's

over the weekend and Monday's strength in the greenback,which was recently buying 118.175 yen, up from 117.76late Friday. The dollar was also moving up against the euro, which was recently trading at $1.2808 vs. $1.2826 previously. Gold prices tend tomove inversely with changes in the value of the U.S.currency.

The big news among the miners was

Freeport-McMoRan Copper & Gold's

(FCX) - Get Report

announcement it would purchase copperproducer

Phelps Dodge

(PD) - Get Report

for $25.9billion in cash and stock. Shares of Freeport werelosing 0.7% lately, while those of Phelps were flying,up 28.6%.

"The combination does not vary Freeport'scommodity mix significantly, adding one new exposure(molybdenum added to gold and copper)," notes a reportby Credit Sights' analysts Chris Snowand Andrew Brady, who acknowledge the acquisition helpsspread the firm geographically.

"We believe the diversity trumps the weakenedcost position and the increase in leverage," they write.

Elsewhere, the

Amex Gold Bugs Index

wasgaining about 1.1%, lifted by the buoyant prices forthe metal, while the

Philadelphia Gold and SilverIndex

was rising 1%.

In base metals, Comex March-dated copper contractswere ahead 0.25 cents at $3.095 pound.

"We expect the market to focus once again onrising copper stocks, and a slowing U.S. macroenvironment," writes Edward Meir, an analyst at ManFinancial. "We still maintain thatcopper has lower to go, while facing

technical

resistance at the $7,000level," or $3.175 a pound.