With most areas of the market losing their luster this month, one sector that's glittering is gold. Since the beginning of the month, the Philadelphia Stock Exchange Gold and Silver Index is higher by 7.8%. Shares of Newmont Mining ( NEM) -- which reported fourth-quarter results today -- are up 11.3%, while AngloGold ( AU) is ahead 10.3% for that period. "When the price of gold broke out of a trading range -- it had been stuck between $270 and $280 -- investors had a reason to jump on board," said Michael Dudas, an analyst at Bear Stearns. But he adds: "There is volatility in the gold market. And it is close to an overbought condition in the near term." For the month, the April gold futures contract is ahead about 6%. It rose above $300 during the day -- a psychologically key level, experts said -- before settling 30 cents to $298.10. Gold stocks also retreated from their recent levels, with the Gold and Silver Index ending down about 4% Wednesday.
"This is a bull market for gold, but investors should exercise caution," said Caesar Bryan, manager of the Gabelli Gold Fund. "A dramatic movement tends to correct itself in some manner." Lately, gold producers have been reducing their hedges, or forward sales used to lock in minimum prices. The trend is bullish for gold because it reduces selling pressures in the market and indicates the companies think prices could rise. AngloGold last week said it decreased its hedges by 20% in 2001, as Marc Dupee reported earlier on RealMoney.com, a move that preceded the rally in gold prices.