Updated from 11:43 a.m. EDT
Israel's deployment of additional soldiers into Lebanon on Wednesday sent gold prices rocketing for a third straight session on fears that the conflict may soon pull in neighboring Syria. Oil prices now firmly above $75 a barrel are adding to the allure of the yellow metal.
"Everybody is asking for a cease-fire, but can you ask for a cease-fire in the war on terror?" asks Jon Nadler, an analyst at Montreal-based bullion dealer Kitco. "Investors see the additional troops that went into Lebanon and the posturing by Syria" and get nervous that the conflict may spread.
Prices for December gold contracts traded as high as $668.20 an ounce before pulling back to close at $664, up $5.30 on the Comex division of the New York Mercantile Exchange. Meanwhile, oil was trading up near $76 a barrel on fears that Tropical Storm Chris may disrupt supply as it gathers speed in the Caribbean.
Shares of the exchange-traded funds
iShares Comex Gold Trust
streetTRACKS Gold Shares
were rising in line with the bullion price.
The gold miners rallied with the metal, with shares of
Freeport-McMoRan Copper & Gold
recently up 1.7%, 0.5% and 1.6% respectively in afternoon trading.
Coeur d'Alene Mines
was up more than 4% after reporting a second-quarter profit of $34.4 million, reversing a year-ago loss.
The miners were aided by the lift in the broader indices, which were spurred upward by a weak jobs report from ADP that new jobs growth was 99,000 in July vs. a consensus forecast of 145,000.
"ADP famously missed in its forecast a month ago"
vs. government numbers
, writes Randy Diamond from New York-based Miller Tabak. But the company is more likely to be correct this time, "or at least in the ballpark."
In the base-metals patch, U.S. copper miner
may increase the cash portion of its bid for Canadian nickel miner
, according to published reports.
A Phelps spokesperson refused to comment on the reports, citing company policy prohibiting discussion of market rumors.
Investors have not viewed Phelps' merger ambitions favorably, so it was no surprise when traders quickly marked down the stock at the opening. But the price recovered swiftly as the rally in the broader market overcame negative sentiment, and shares were recently trading up 1.5%.
In separate news,
Toronto's Globe & Mail
reports that Brazil's massive iron ore miner
Companhia Vale do Rio Doce
is "working frantically with its advisers to prepare a run at Inco."
Shares of CVRD were trading up 2.5%, while those of Inco were rising 1.5%.
Comex September copper prices edged down less than a quarter cent to close at $3.5925 a pound as the market waited for further news of a possible strike at Chile's Escondida mine.
"Although the market has had time to digest the potential for a strike in Chile, if one does get off the ground, then there may well be further room on the upside," notes William Adams, an analyst at Basemetals.com, in a daily report. "There is good reason to remain bullish for copper."
Meanwhile, shares of giant Canadian aluminum smelter
were jumping almost 7% in afternoon trading after the company announced bumper second-quarter earnings from continuing operations of $1.21 a share compared to $0.56 a year ago. Alcan also upped its quarterly dividend 33% to $0.20 a share from $0.15.
The company cites higher volumes and robust metal prices, which it sees continuing through the second half of the year. Aluminum prices are currently up 33% since last August.
Shares of U.S. rival
were also moving up 1.3%.