up 657 first gain in four sessions

Gold futures mark first gain in four sessions

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Last Update: 4:14 PM ET May 22, 2006


SAN FRANCISCO (MarketWatch) -- Gold futures climbed Monday, recovering from a three-week low to post their first gain in four sessions as some traders viewed the metal's more than $60-an-ounce drop since May 11 as a buying opportunity.
"Nearly completing a full $100 correction from highs recorded just 10 days ago, gold now appears to be a reasonable-enough buy to more and more investors," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.
No one is "yet certain that the bout of profit-taking has come to an end, at the very least, increasing numbers of sidelined buyers feel more comfortable with the low $600's as a buying opportunity," he said.
Gold for June delivery rose 20 cents to close at $657.70 an ounce on the New York Mercantile Exchange, recovering from a low of $643.50, an intraday level the contract hasn't seen since April 28.
The front-month contract had lost $35.40 an ounce over the previous three sessions and had dropped $64 an ounce since closing at a 26-year high $721.50 on May 11. Read more.
"When taking into account the overall fundamentals of the dollar, of inflation prospects, and that of equities, most investors remain of the opinion that a core hedge position in gold remains very much warranted," said Nadler. Gold, which is denominated in dollars, is widely viewed as a hedge against an increase in inflation.
Weakness in the U.S. dollar by the afternoon provided support for the metal. The greenback was down 0.1% against the yen at 111.55, though it reached a two-week high of 112.94 in overnight trading. The buck was also 0.7% weaker versus the euro at $1.2858. See Currencies.
"Despite some speculating [that] the bull run for gold is over, in my view there are still far too many factors in favor of being long gold, with $850 remaining a realistic target for later in the year as investment demand continues to swell prices," James Moore, an analyst at TheBullionDesk.com, said in a note to clients. See a related story.
Elsewhere in metals trading Monday, July silver closed at $12.43 an ounce, up 7 cents, after a decline to a low of $12.21. July copper slumped 0.75 cent, or 0.2%, to end at $3.4615 a pound.
July platinum shed $28.80, or 2.2%, to close at $1,284.60 an ounce, and June palladium dropped $10.05, or 2.9%, to finish at $341.75 an ounce.
Indexes suffer more declines
Indexes that track the metals-mining sector logged their eighth losing session in a row.
The Philadelphia Gold and Silver Index (XAU : phlx gold silver index capital-weight
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4:03pm 05/22/2006