Gold moves higher

Gold moved higher on Thursday, tracking a rise in oil prices and a rebound by stocks, but investors remained wary because of the metal's recent erratic trading pattern. Gold rose just under 1 percent to $649.00/650.00 by 1546 GMT, against $643.00/643.75 in New York late on Wednesday.
When it fell to a one-week low on tumbling shares that raised fears about another flight from risk. "There seems to be a clear parallel at the moment between stock market sell-offs and gold sell-offs, but we think that the relationship will break down eventually," said David Holmes, director of precious metals sales at Dresdner Kleinwort.
"Oil has been a big factor in the market but right now I am not really looking for the gold market to break out of its range. I don't think the US economic data is going to push it out. I don't think the dollar is going to push it out."
Traders said buoyant base metals also triggered buying in the precious complex. Copper jumped 5 percent, zinc 4.5 percent, while nickel soared 8 percent on the London Metal Exchange.
"Oil is holding above $58 and the dollar is easing versus the euro, so bids are appearing on gold," one trader said, adding that prices may now try for $655.
Analysts said gold was pivoting at the $650 level, with a dip below that price attracting institutional and physical buyers and a move above resulting in profit-taking on worries that the metal might not make much more progress. Also a large net long speculative position was causing many to hold back from chasing the metal too high.
Longer term, concerns about the US economy following troubles in the mortgage and housing market, tensions in the Middle East and generally firm oil would support the metal. Investment bank ABN-Amro issued a positive research note on precious metals, predicting an average price of $695 in 2007, rising to $740 in 2008 from $604 last year.
Gold rallied to a nine-month high of $689 on February 26 as growing tensions between the United Nations and Iran over that country's nuclear ambitions prompted investors to buy gold. Bullion investors watched European and Asian stock prices, which rose sharply after steep losses the previous day. Tokyo's Nikkei closed up 1.1 percent, while Britain's top share index jumped 1.8 percent. Wall Street was slightly higher, up 0.22 percent.
In other precious metals, silver rose to $13.04/13.09 an ounce from $12.76/12.81 in New York, while platinum gained to $1,213/1,217 an ounce from $1,200/1,205. Palladium rose to $350/355 an ounce from $345/50.