Gold futures recovered in early trade on Wednesday, but tame US consumer inflation data and surprisingly strong housing starts data restrained prices from retesting Tuesday's two-week high above $600 an ounce.
At 10:10 am EDT (1410 GMT) at the COMEX division of the New York Mercantile Exchange, gold for December delivery was up $3 at $596.50 an ounce, trading from $591.70 to $598.80. "We cut gains after today's 8:30 am data. At this point, I think we're looking at a range in gold of $590-$600," said commodities commentator James Quinn at A.G. Edwards & Sons.
The Labour Department said overall US Consumer Price Index fell 0.5 percent in September, the biggest drop since November 2005. The headline number was pulled down by a sharp drop in energy prices. When energy was factored out along with food costs, the core rate of inflation rose 0.2 percent.
Separately, the Commerce Department said housing starts rose 5.9 percent, hitting an annual pace of 1.772 million units, better than the 1.640 million expected. On Tuesday, gold corrected down $5 after rising $25 in a week and $35 since hitting a four-month low at $563.50 on October 4.
Physical buying in Asia overnight helped prop up gold, following a downturn in crude oil prices. The US precious metals market brushed off soft NYMEX crude prices, despite a strong correlation in recent months linked to gold's attractiveness as an inflation hedge. The November oil contract was off 10 cents at $58.84 a barrel on Wednesday morning.
Spot gold bullion was quoted at $592.40/3.40, up from Tuesday's close at $590.30/1.30. London bullion dealers fixed the afternoon spot reference price at $594 an ounce. December silver was up 13 cents at $11.91 an ounce, erasing Tuesday's 13 cent fall. The early range was $11.74 to $11.98.
Spot silver was trading at $11.81/88, up from New York's close at $11.68/75. Silver was fixed at $11.76. NYMEX January 2007 platinum rose $4.20 to $1,087.20 per ounce. Spot platinum was last priced at $1,084/1,089. December palladium was up $10.40 at $330.00 an ounce. Spot palladium last fetched $326/331 an ounce.