Updated from 11:51 a.m. EDTGold rose Thursday as concern shifted from the Mumbai bombings to the Mideast, where tensions between Lebanon and Israel are escalating. After a fitful start to the trading day, contracts for August delivery of gold closed up $3.20 at $654.30 an ounce on the Comex division of the New York Mercantile Exchange, or NYMEX. Shares of the bullion-exchange-traded funds iShares Comex Gold Trust ( IAU), streetTRACKS Gold Shares ( GLD) and iShares Silver Trust ( SLV), followed futures prices higher. Shares of gold miners Barrick Gold ( ABX), Newmont Mining ( NEM) and Freeport-McMoRan Copper & Gold ( FCX) were trading down, along with the broader equity indices. "We would voice caution at this stage on metals, as increasing turmoil in the Mideast could further unnerve U.S. equity markets, with any weakness here hindering a metals advance," notes Edward Meir, an analyst with Man Financial in a morning market update. The larger geopolitical tensions seem to be overshadowing other aspects of the gold market, including news that the increased volatility in the price of gold could lead to lower U.S. jewelry fabrication later this year. "The critical time in the market will be seen in the coming months as retail orders are placed for Christmas," states a report by London-based specialty consulting firm GFMS. The report goes on to state that the industry might see its vital Christmas-time orders delayed until later than usual due to the wild swings in gold price this year. Jewelry fabrication is expected to absorb almost two thirds of gold production in 2006. Silver futures followed those of the equity market lower and contracts for September delivery closed down 7 cents to $11.48 an ounce, reflecting silver's sensitivity to industrial demand. Platinum closed at $1,264 an ounce, down a modest $3.60. Palladium, however, closed, up $4.10 cents at $334.5 an ounce. Shares of palladium miners North American Palladium ( NAP) and Stillwater Mining ( SWC) were off 4% and 3%, respectively.