Gold futures rallied early Thursday as the dollar fell to a 14-year low against the British pound, while a bigger-than-expected rise in core inflation data burnished the metal's appeal as an inflation hedge.

Gold for December delivery was last up $8.50 at $644 an ounce. The benchmark contract closed lower Wednesday as traders weighed mixed economic data on the health of the U.S. economy and as the dollar won back some ground against the euro.

That trend reversed on Thursday with the dollar falling against all its major rivals, especially sterling, on continued concerns the U.S. economy will grow at a rate more slowly than other countries.

There was further support in data showing core inflation rose slightly faster than expected, at 0.2%, in October. This kept the year-over-year gain in the core personal consumption expenditure price index at 2.4%, well above the Federal Reserve's implied cap of 2%.

Economists had been expecting core prices to rise just 0.1%, according to a survey conducted by MarketWatch.

Meanwhile, oil prices extended their gains above $62 a barrel in a continued response to supply data that were viewed as bullish as well as to forecasts for cold weather across the U.S. in the coming days.

"The threat of oil-driven inflation and bearish sentiment toward the dollar will continue to draw investors towards gold and its unique properties as a store of value," said James Moore, analyst at TheBullionDesk in London. "While gold is meeting stiff resistance around $640, dips continue to find good support and given the movements in oil and the dollar, will eventually push gold on to $650," he said.

Other metals joined in gold's rally. Silver futures moved up 25.4 cents at $13.82 an ounce, platinum rose $24.10 an ounce and palladium added $3.70 to $326 an ounce. Copper rose 2.40 cents to $3,152 a pound.

The price of gold was down $3.81/oz by Wednesday afternoon as the dollar showed steady strength throughout trade on Wednesday.

At 3.30pm US GDP figures were released showing that the economy had grown by a revised 2.2 percent in the third quarter, compared to the 1.6 percent figure released previously. The market had expected growth of about 1.8 percent.

By 4.02pm, spot gold was quoted at $635.89 a troy ounce from an overnight close of $639.70/oz.

The euro was bid at $1.3151 from $1.3193 late on Tuesday.

Matthew Turner, analyst at Virtual Metals in London, says that gold will continue to track the dollar in the short-term and points out that some market watchers say this correlation will continue for the next year.

New home sales data out of the US was still expected at 5pm SA time.

In a report by National Australia Bank economist, Gerard Burg, on Wednesday, which forecast an average gold price of $675/oz in 2007, up from his 2006 forecast of $606/oz.

The reasons behind the bullish forecast included US interest rate cuts and increasing jewellery demand for the yellow metal.

Turner says Virtual Metals is seeing signs of a platinum market in balance after years of deficit. The price has come down dramatically after last weeks’ dramatic rise to record highs of $1400/oz.

Platinum was flat at $1155/oz, while palladium was quoted at $319.50/oz, down $2.50 from its overnight close.

Gold prices are likely to head higher in 2007, benefiting from US interest rate cuts and increased demand for the metal from jewellers, National Australia Bank minerals and energy economist Gerard Burg said in a report.

The report forecasts gold to average 675 usd an ounce next year, up 11 pct over the expected average price of 606 usd for 2006.

'In 2007, gold prices are expected to rise further, particularly as the US Federal Reserve begins to cut interest rates in the second half of the year,' Burg said.

He said such cuts should provide increased incentives for gold investment, as gold's relative return improves in comparison with fixed interest assets, such as bonds.

But, Burg said, the path of prices over 2007 may be dependent on consumer demand, noting that the high volatility in gold prices in 2006 deterred jewellery consumers, particularly in price sensitive regions such as India and the Middle East.

Burg said perceptions about global political stability, particularly in the Middle East, inflation and economic growth prospects will also have an influence on gold markets, adding some uncertainty, but also potentially boosting investment demand.

NAB contends that an upward trend in gold prices will return following the weaker-than-expected performance of the metal over the past four months.

Burge noted the volume of speculative interest in gold markets, as represented by non-commercial positions on the COMEX, has fallen in recent months, in line with weaker price movements.

But, he said, speculative positions have resumed an upward trend since the start of November, supporting a price recovery.

As well, further price support should come from producers cutting forward sales by 357 tons in the first three quarters of 2006 with more to come, he said.

For the first 10 months of 2006, gold prices averaged 600 usd an ounce, a year-on- year increase of 38 pct. Since peaking in May, at over 720 usd an ounce, the metal fell back to 563 usd in early October before recovering to trade around 637 usd

For the first three quarters of 2006, end-user gold consumption decreased by around 13 pct to total 2455 metric tons.

Burg said the fall reflected a sharp decrease in jewellery consumption, which fell by 18 pct over the period.

Jewellery is the largest end-use sector for gold, accounting for over two-thirds of total consumption in the first three quarters of 2006.

Burg said despite strong gold prices, output has been slow to increase

'Under investment in exploration and development in the late 1990s, combined with rising costs for producers, has delayed new projects,' he said.

For the first three quarters of 2006, global gold output slipped by 2.1 pct to 1,804 metric tons.

Burg said gold production is forecast to increase modestly in 2007, with increased output in Australia and North and South America, more than offsetting declines elsewhere.

NAB is forecasting global output to rise 3.3 pct to 2,575 tons in calendar 2007 from 2006.

Gold fell more than one percent on Tuesday from 15-week highs scored the previous day as investors took profits ahead of the release of key U.S. data, dealers said.

Platinum slipped to a three-week low before rebounding, while silver and palladium were little changed.

"Unless the dollar starts to weaken significantly again, the market does seem to have done enough for the time being," said Simon Weeks, director of precious metals at ScotiaMocatta.

If gold failed to get back above $640-$642, prices might drop to around $630 -- the level in the middle of last week when U.S. traders left the market ahead of the Thanksgiving holiday, he said.

Investors awaited comments from Federal Reserve Chairman Ben Bernanke on the economic outlook due at 1730 GMT and U.S. third-quarter gross domestic product data due on Wednesday.

Spot gold hit a high of $641.70 an ounce before falling to $632.80/633.45 by 1528 GMT, against $640.60/641.60 in New York late on Monday, when prices rose to their highest since mid-August.

Profit-taking might persist, but prices were unlikely to drop sharply in the coming days, dealers said.

"Overall, the broad macroeconomic context looks positive for gold at present, but further gains from here will continue to be highly reliant on the future path of the dollar," Barclays Capital said in a daily report.

Gold moved lower despite weakness in the dollar, which fell to a fresh 20-month low against the euro before paring losses.

Gold often moves in the opposite direction to the dollar.

Despite selling by gold investors on Tuesday, UBS Investment Bank forecast the price at $660 in a month and at $690 three months from now.

TheBullionDesk.com said in a note that chart resistance around $640-$642 and caution ahead of Bernanke's address was curbing gold's bullish sentiment.

"However, the metal's increasing correlation with the euro and return of investor money, as players begin to diversify away from the greenback, should see gold challenge $650 and eventually $685 before year-end," it said.

In other metals, platinum dropped as low as $1,130 an ounce before rising to $1,155/1,165, compared with $1,140/1,150 in the U.S. market. Prices have fallen 19 percent since touching a record high of $1,395 last week.

Silver edged down to $13.42/13.49 an ounce from $13.46/13.53, while palladium was down $1 at $322/327.

Gold hovered near its highest
level in more than three months on Tuesday, but investors may
hold off chasing the metal too strongly ahead of the release of
key U.S. data.
Spot gold hit a high of $641.70 an ounce before
slipping to $639.20/640.20 an ounce by 0350 GMT, down from
$640.60/641.60 late in New York.
 The metal had rallied to its highest since August 11 at
$641.75 an ounce on Monday on a weaker dollar, firm crude oil
prices as well as purchases after the U.S. Thanksgiving
Day holiday.
 Profit taking may persist, but dealers said gold would find
support around $635. Investors await comments from Federal
Reserve Chairman Ben Bernanke on the economic outlook due at
1730 GMT and U.S. third-quarter gross domestic product data due
on Wednesday.
 "If you've made some money at this stage, I guess you would
want to take some profit. I think it's going to be a tight
range and gold is pretty well tied to the U.S. dollar," said a
dealer in Sydney.
 "But the technical picture looks better," he said.
 The euro inched up to $1.3145, closing in on a
20-month high of $1.3180 hit on electronic trading platform EBS
on Monday. The dollar dipped to 115.95 yen from around
116.10 yen in late U.S. trade.
 "There was no fresh buying at around $642. People are still
talking about buying at lower levels," said Ronald Leung,
director of Lee Cheong Gold Dealers in Hong Kong.
 "There will be another range trade of $630 to $650," he
said.
 Benchmark gold futures on the Tokyo Commodity
Exchange, currently October 2007, fell 9 yen per gram to 2,411
yen, having risen to a 2-week high the previous day on
fund buying.
Platinum dropped to its lowest level in more than
three weeks at $1,130 an ounce as fund selling continued after
talk of an exchange-traded platinum fund subsided.It has lost around nearly 19 percent in value sincetouching a record high of $1,395
last week. The metal was last quoted at $1,140/1,150 late in New York.

Silver edged up to $13.47/13.54 an ounce from
$13.46/13.53 late in New York.Palladium rose to $324/329 an ounce from $323/328.

Spot gold traded as high as $641.90/oz on Monday and could head towards the $700/oz level again if the dollar continues to weaken against the euro.

This is according to Gregor Krall, technical analyst from BOE Private Clients, who says the euro has broken its seven-month range and is now targeting a level of $1.36.

This is favourable for gold both as an alternative investment and because it becomes cheaper in other currencies.

"The most recent move above $636.50 validates a reverse head and shoulder formation with an upside target just above $700," Krall told I-Net Bridge, "with an initial target at $660/oz."

The euro and the pound surged against the dollar recently after comments by the deputy governor of the People's Bank of China coupled with concerns about the US economy caused selling in the US currency.

US holidays have induced thin liquidity in the market, which has contributed to the sharp gains.

By 1.49pm on Monday, the price of gold was up $1.10/oz at $639.10/oz. The yellow metal is up over $80/oz or 14 percent since it hit a more than three month low of $558.10/oz on 4 October.

The euro was bid at $1.3118 from $1.3156 late on Friday, while the near-dated Brent crude contract was quoted at $59.85 a barrel from Friday's $60.03.

Platinum was quoted at $1185/oz from Friday's close of $1187.50/oz. Palladium was quoted at $328.50/oz, up $3.50 from its overnight close.

Gold climbed to its highest level in more than three months on Monday as a weaker dollar and firm oil prices prompted investors to buy the metal.

Silver touched a six-month high, but platinum fell $5 an ounce to trade way below last week's record high levels.

Spot gold was quoted at $639.10/640.10 an ounce by 1113 GMT, against $638.10/639.10 in Europe late on Friday. The metal rose as high as $641.75 an ounce in Asia.

"At $640, people sold and locked in some of the profit, but overall gold looks very strong. There is more upside (potential) at the moment than downside," said Michael Widmer, metals analyst at Calyon Corporate and Investment Bank.

"People have become more confident towards gold and less confident towards the dollar. There is enough evidence for the dollar to stay weak in the next few months."

The dollar backed away from a 20-month low hit earlier against the euro and a three-month trough versus the yen, as comments from France's finance minister cooled last week's euro rally.

A weaker dollar makes gold cheaper for holders of other currencies. The metal is also generally seen as a hedge against inflation.

Oil rose one percent towards $60 a barrel after Saudi Arabia's oil minister said OPEC may cut output further when it meets on December 14.

The gold market was likely to remain choppy on Monday as U.S. investors would return to the market after holidays.

"U.S. traders returning after their long Thanksgiving holiday may look to unwind some weekend longs, taking advantage of the market over $10 higher than Wednesday's close," said James Moore, precious metals analyst at TheBullionDesk.com.

"But the combination of strong technical outlook, weak dollar/firm oil should see gold target $650 in the coming sessions," he wrote in a daily market report.

Dealers said firm gold prices were expected to hit physical demand in key consuming nations.

The World Gold Council said Saudi Arabia's third-quarter gold demand fell 9 percent to 33.9 tonnes compared with the same period in 2005 as high prices and a downturn in the local bourse dampened sales.

"The market is in a nice upward trend after breaking through a key level today based on the dollar's weakness," said Shuji Sugata, assistant manager at Mitsubishi Corp. Futures and Securities Ltd.

"We are more convinced that the outlook for gold will stay strong in the longer term," Sugata said.

Silver rose as high as $13.54 an ounce before dropping to $13.46/13.53, against $13.39/13.46 on Friday.

Platinum was quoted at $1,180/1,190 an ounce, down from $1,185/1,200 on Friday. The metal had surged to a record high of $1,395 last Tuesday. Palladium was at $326/331 an ounce, up $1 from its precious close.

The price of gold rallied on Friday due to a dramatic drop in the US Dollar. This one year comparative chart shows the price fluctuations between the US Dollar and the StreetTracks Gold ETF (GLD). In May there was a dramatic drop in the US Dollar and Gold rallied to the $700 level. This current weakness in the USD may the catalyst that Gold needs to re-test the highs set in May.

Gold prices climbed 1.4 percent on Friday on a weaker dollar, with the absence of U.S. players making the market choppy, dealers said.

Platinum also gained, but traded well below this week's record high of $1,395 an ounce on talk of an exchange traded fund (ETF). Other precious metals followed gold's upward move.

"The market is trying to get up to $640 an ounce at some point, but there are some sell orders around there," said a precious metals trader in London.

"The dollar is weak at the moment. The market is fairly thin so it didn't take a huge amount to move it up," he added.

Spot gold was quoted at $639.30/640.30 an ounce by 1453 GMT, up from $630.30/631.30 late in London on Thursday.

Gold was helped by the euro, which shot above $1.31 for the first time since April 2005, extending sharp gains made this week as a combination of euro-positive factors finally triggered a break-out of long-established ranges.

Gold often moves in the opposite direction to the dollar and is generally seen as a hedge against inflation."This move in the dollar, if sustained, will see precious metals prices gain further ground," said a market report from UBS Investment Bank, which saw gold prices at $640 in one month and $670 in three months from now.

Dealers said prices were vulnerable to wider fluctuations due to the lower numbers of players in the market. New York commodities and energy markets will remain closed on Friday for the Thanksgiving holiday, re-opening on Monday.

"Gold is gaining and $650 an ounce must be the target. But it wouldn't go there today because no one will dare to do that if there is no U.S. trading. It's too risky," said Matthew Turner, precious metals analyst at Virtual Metals in London.

In other precious metals, spot platinum rose to $1,185/1,200 an ounce from $1,163/1,178 in London, where it gained 1.8 percent, capping a volatile week in which it hit a new record peak.

Dealers said the metal had potential to gain on positive fundamentals. The market is expected to remain in deficit in 2006 for the eight year in a row.

Talk of an ETF could resurface again, prompting speculators to build fresh positions, dealers added.

Silver was at $13.43/13.53 an ounce, up from $13.09/13.16, while palladium rose to $325/330 an ounce from $322/32.

Gold ticked up on Friday as a weaker dollar and thin liquidity due to holidays lifted prices, while platinum steadied after a volatile week that saw it touch a new record peak on speculative buying.

Spot gold had risen to $632,30/633,30 an ounce in early trade, up from $630,20/631,20 late in London.

"It’s very thin as the Japanese have just come back from a holiday and the Americans are still not in today," said Ellison Chu, senior manager at Standard Bank London in Hong Kong.

Japanese markets reopened for trade on Friday following a national vacation on Thursday, although New York commodities and energy markets will remain closed on Friday for the Thanksgiving holiday.

"The US dollar and oil price lead gold higher, and we may see $635 again."

The dollar held near a five-and-a-half month low against the euro on a strong German business sentiment survey that strengthened expectations that euro zone interest rates will keep rising into next year.

In early trade, the dollar stood at about $1,2954 against the euro, putting it well in range of $1,2979, above which would be its lowest point since May last year.

Against the yen, the dollar was at 116,36, just off a nadir of 116,14 hit the previous day.

Oil prices steadied after crude stocks increased in top consumer the US, weighing on already well-supplied markets, with US crude rising 4 cents a barrel to $59,28.

Benchmark gold futures on the Tokyo Commodity Exchange dipped ¥3 per gram to 2,396 yen per gram.

Spot platinum was at $1,165 an ounce, roughly steady with $1,163 in London, where it had gained as much as 1,8%, capping a volatile week in which it hit a new record peak of $1,395. The metal had spiked amid talk of the launch of an exchange traded fund only to tumble 18% the next day.

"Platinum spiked up on panic short-covering, I don’t think it was investors, but that desperation has calmed down now and the macro forces are resuming again," said a Singapore-based trader. Silver was at $13,12/13,17 an ounce from $13,10/13,17 late in London. Palladium was at $324,00/329,00 an ounce, against $322/327.

Gold steadied in quiet trade on Thursday and looked at the dollar and oil for direction, but platinum gained after tumbling this week from record highs.

Spot gold hovered in a tight $3-an-ounce range and was quoted at $630.20/631.20 an ounce by 1530 GMT, little changed from $629.90/630.90 in New York late on Wednesday.

"Gold has been in a pretty narrow range and has been consolidating. I don't expect any dramatic moves in the last weeks of the year," Jeremy East, head of metals trading at Standard Chartered Bank in London, said.

"People may be taking some risk off the table and it looks like the long-term investors are staying with the market."

Dealers said the market was likely to remain quiet, with the United States shut for Thanksgiving. There were no U.S. data or policymaker speeches later in the day.

Investors would focus on external factors for market direction, they added.

"Gold is still struggling to overcome the $628-$630 chart area at the moment but given the dollar's recent movements, I would expect gold to continue higher once the market returns to full operations next week," said James Moore, precious metals analyst at TheBullionDesk.com.

The euro hit a 5-1/2-month high against the dollar, while oil eased after crude stocks piled up in top consumer the United States and weighed heavy on amply-supplied markets.

Gold often moves in the opposite direction of the dollar and is generally seen as a hedge against inflation.

"Gold has moved back up above $630 but light volumes due to the Thanksgiving holiday in the U.S. are likely to keep trading quiet through the rest of the week," Barclays Capital said.

"Should dollar weakness persist, we see some upside potential for gold as trade returns in full swing next week."

PLATINUM GAINS

In other precious metals, platinum gained as much as 1.8 percent before easing to $1,163/1,178, against $1,145/1,165 an ounce in the U.S. market.

The metal has been volatile this week, hitting a record high of $1,395 on Tuesday on talks of the launch of an exchange traded fund and tumbling 18 percent the next day.

The Shanghai Gold Exchange widened the maximum daily trading range for gold and platinum to 30 percent from 10 percent, which would allow prices to track more closely swings in international prices.

"Now those short positions have been covered and we are almost back to normality now. Medium term, I am quite friendly to the platinum market," East said.

"The outlook is good and supply is relatively inelastic. We know that demand is going to be increasing over the next few years," he added.

Silver was at $13.10/13.17 an ounce, higher from $13.04/13.11 in New York, while palladium was unchanged at $322/327 an ounce.

Gold closed higher in Hong Kong Wednesday at US$628.20 an ounce, up US$3.00 an ounce from Tuesday's close of US$625.20.

Platinum jumped more than 11 percent to hit a record high in volatile trade on Tuesday as funds poured money into the metal, driven by talk about the launch of an exchange traded fund (ETF).

But the metal retreated about five percent from its peak on profit-taking. Spot platinum surged as high as $1,395 an ounce before falling to $1,320/1,340 by 1251 GMT, still well above $1,251/1,256 late in New York on Monday.

"It's being driven entirely by speculation that there is going to be the launch of an ETF," said Stephen Briggs, economist at SG Corporate and Investment Banking.

The platinum market was very small compared to gold and silver and had limited above-ground stocks, he said, adding an ETF would have a significant impact on the availability of the metal for genuine consumers.

"That's why the reaction is so dramatic."

ETFs, often backed by a physical commodity, enable investors to trade securities on an exchange and give investors a return based on commodities prices, without the need to trade futures or take physical delivery.

The metal, mainly used in jewellery and to clean car exhaust emissions, has jumped more than 30 percent in a month on the ETF talk, but there has been no confirmation so far.

A spokeswoman at U.S.-based Barclays Global Investors, which has launched gold and silver ETFs, told Reuters late on Monday the company had not filed any regulatory documents relating to a platinum trust and did not have any immediate plan to do so.

"A platinum ETF could be difficult to establish due to the lack of liquidity and likely resistance from producers and auto manufacturers," Numis Securities said in a market report.

PHYSICAL DEMAND MAY SLIP

Johnson Matthey, the world's top platinum distributor, said last week that supply and demand for the metal were likely to reach record levels in 2006, leaving the global market in deficit for the eighth consecutive year.

"Indeed we believe the longer term prospects for platinum demand have been damaged by this move," said John Reade, analyst at UBS Investment Bank.

"It will accelerate substitution efforts from industrial users of the metal and with Chinese jewelers unable or unwilling to buy platinum ahead of Chinese New Year, it will prompt a switch to other precious metals."

Shares in Lonmin, the world's third-biggest platinum miner, rose about four percent mainly on high metal prices.

"Platinum is back in uncharted territory and the combination of extreme illiquidity and aggressive speculation could push prices even further," said James Moore, precious metals analyst at TheBullionDesk.com.

Other precious metals drifted higher tracking platinum. Gold hit a high of $626 and was last at $624.90/625.90 an ounce, against $622.20/623.20 late in New York.

Silver increased to $12.88/12.95 from $12.74/12.81 an ounce, while palladium rose to $325/330 from $319/323.

The U.S. dollar was lower against most other key currencies in European trading Monday morning. Gold rose.


Gold traded in London at $624.00 bid per troy ounce, up from $617.75 late Friday.

In Zurich the bid price was $622.45, up from $618.03.

Gold rose $5.90 in Hong Kong to close at $624.10.

Silver opened in London at $12.68 bid per troy ounce, unchanged.

This one year chart of the StreetTracks Gold Index (GLD) shows the current price hitting technical resistance at $62. If the Index can break through this level it is poised to go much higher and possibly test the levels hit in May and June of 2006.

Gold rebounded Friday after dropping earlier in the day, following movements in the energy and currency markets.

December gold settled up 80 cents to $622.50 a troy ounce, after initially trading as low as $614.50.

Gold initially sold off as energy prices weakened and the dollar climbed. But then as the dollar pulled back and oil prices pulled up, gold recovered.

"I think there is still a general inclination to buy the market on the dips," said Stephen Platt, analyst with Archer Financial Services, also noting there's a general sentiment that December gold's support area is $615-$618.

"There is some feeling we could maybe work higher into the end of the year," he added.

December crude fell as low as $54.86 Friday, but rebounded to well above $55 in later trading. Meanwhile, the dollar rose early in the day against the euro, but then ended lower. The euro bought $1.2816 in late New York trading, after a U.S. government report said housing construction starts fell to a more than six-year low.

Gold is viewed as a hedge against a weakening dollar.

Meanwhile, January platinum settled up $2.80 at $1,192.10 an ounce, after trading as low as $1,135.

December silver settled down 14.5 cents to $12.80, after trading as low as $12.60.

December palladium settled down $4.30 to $317.95 an ounce.

Most-active December copper settled up 1.65 cents at $3.0575 per pound. Earlier in the day session the contract dipped to a fresh 4-1/2 month low of $2.98 but rebounded on a softening dollar and rally in crude oil.

Gold bounced around on Friday as the U.S. dollar extended gains, while platinum dropped more than 2 percent on persistent selling in Japan following this week's report from top distributor Johnson Matthey.

Spot gold fell to an intraday low of $616.10 an ounce, hit a high of $618.90 and was at $618.00/619.00 by 0723 GMT.

Gold was last quoted at $618.00/619.00 in New York on Thursday, when the dollar gained after the U.S. government said consumer prices fell by a greater-than-expected 0.5 percent in October.

"I reckon we may hit $610 and trade below that. Resistance is going to be around $630, and I think oil can become more of an issue again should it break $60," said a dealer in Sydney.

Gold fell nearly $6 in the U.S. market as the dollar firmed after the CPI data reinforced views the Federal Reserve will keep interest rates steady. The metal has lost around 3 percent in value since rallying to a two-month high of $636.50 last week.

A rising U.S. currency makes dollar-denominated gold more expensive for holders of other currencies.

Spot gold was up over $3/oz by early afternoon trade today but remained at the upper end of a range ahead of US consumer price data and continued speculation that the Chinese Central Bank may buy gold to diversify its reserves.

Modest two-way interest has been seen this morning but for the moment gold should continue its theme of consolidation around $613/oz $628/oz with a bias to the upside amidst growing speculation of CB (central bank) diversification away from the dollar," said the TheBullionDesk.com’s James Moore in a note.

Recent producer inflation levels in the US, that were lower than the market expected, hinted at a potential halt to rate hikes in future, however Federal Bank meeting minutes do indicate a more hawkish position, according to Nedbank Treasury.

"Gold prices came under pressure yesterday as the minutes of the last FOMC meeting suggested a much more hawkish Fed than had been anticipated," said the bank.

The price of oil, which has an effect on the gold price because of its global inflation influence, was also up slightly yesterday as inventory levels were shown to be down.

In afternoon trade, gold was trading at $625,80/oz, up $3,10 on yesterday’s close of $622,70/oz.

The dollar was trading at $1,2804 against the euro, from a previous close of $1,2827.

This 6 month chart of December 2006 Gold shows price resistance at $625. If it is able to break through in the coming sessions there may be a rally back to the $660 range.

The head of the world's second-biggest gold producer, Newmont Mining Corp., said on Tuesday gold prices could go even higher due to concerns about the U.S. economy and pressure on the dollar.

"Gold has a lot of headroom to grow, and we have a way to go in the current gold cycle," Newmont Chairman and Chief Executive Officer Wayne Murdy told reporters in Johannesburg.

Murdy said he would not estimate the gold price towards December and next year but that it would hover around current levels or better. Gold traded at $636 an ounce on Tuesday.

"When we look at the gold price, the factors driving the price have not changed much, the supply side has not improved and we see a flat to declining supply in the future," he said.

"There is strong physical demand from jewellers when the price goes below $600 per ounce," he added.

Murdy, who heads the Denver-based mining company, said the performance of the U.S. economy contributed to his expectations of a stronger gold price.

"Since gold is priced on an inverse relation to the dollar, we see continued weakening of the dollar versus Asian currencies mainly due to the huge trade imbalance with China, and we don't see that changing drastically," Murdy said.

He said the United States was spending some $60 billion more per month on imports than exports and that this had worsened its balance of payments, favouring a weaker dollar.

"The development of China, India and Brazil economies has also boosted demand for gold, making this a decade of commodities as opposed to the dot.com era of the 1990s," he said on the sidelines of a mining safety and health conference.

WEST AFRICA

Murdy said Newmont was positive about its exploration in West Africa and that the company had in Ghana alone a reserve of 18 million ounces by 2005, which it hoped would increase.

"We are doing exploration in West Africa and have been fortunate in Ghana. We continue to explore, and we feel we will be very successful in growing our reserve base," Murdy said.

Ghana is Africa's second-biggest producer of gold after South Africa, producing some 6.5 million ounces last year.

Newmont's potential production from Ghana is 950,000 ounces a year from two mines -- Ahafo, which is expected to produce between 225,000 and 250,000 ounces of gold this year, and a $525 million, 450,000-ounce-a-year site at Akyem.

Akyem has been hit by a delayed clearance on its environmental impact assessment approval by authorities, while projected start-up costs have been rising, Murdy said.

A merger in January between North American-based Barrick Gold and Placer Dome created the world's top gold producer and pushed Newmont to the number two slot.

Spot gold fell below $630/oz in early afternoon trade on Monday as it again failed to hold above this key level. The dollar and oil, both recent drivers of the yellow metal, were slightly stronger and weaker respectively.

Temporary highs

On Friday gold hit a more than two-month high of $636.50/oz following comments from China pointing at a diversification of its reserves away from the 70 percent exposure to dollar instruments.

In a note to clients on Friday, Numis Securities in London said that gold makes up one percent of the Chinese Central Banks $1 trillion of foreign exchange reserves.

"If assuming China's economy were to remain flat and the $1 trillion of reserves were to include five percent gold, then this would require gold reserves worth $50-billon," said the note.

The price has since cooled to its latest price of $624.10/oz at 1.55pm, down $4.35/oz from its closing price of $628.45/oz. It earlier traded as high as $632.65/oz.

US currency the key driver

In the November edition of the newsletter, Fortis Metals Monthly, released by Virtual Metals in London, investors are pointed out as the main drivers of gold at the moment.

"While there is always the chance that gold might recover ground lost in recent months and revisit the highs of 2006 before the end of the year, the chances of this are in the hands of investors, watching the performance of the US currency," said the newsletter.

Since 13 October, when the dollar was trading at its strongest against the euro in three months, it has weakened from $1.2480 to a low of $1.29 on Friday. Gold has followed this move and increased by $60/oz since then, from $576.50/oz to its two-month high reached on Friday.

By 2pm the dollar was slightly stronger against the euro at $1.2834, compared to $1.2851 late Friday.

The Fortis newsletter also discussed platinum saying that despite net longs on Nymex having decreased by 67 percent since the start of September, environmental legislation on toxic emissions from vehicles around the world would continue to provide a solid base for demand in the longer-term.

Platinum was quoted at $1,189.50/oz from a close of $1,206/oz. Palladium was quoted at $322.50/oz, down $7 from Friday's close.

Barrick Gold Corp., the world's biggest gold producer, extended its bid for Pioneer Metals Corp. to Nov. 30.

Toronto-based Barrick said today in a statement distributed by CCNMatthews that it has acquired 59.1 million shares of Pioneer. Barrick had 58.6 million shares of Vancouver-based Pioneer on Oct. 20, when it last extended the offer.

Barrick became the world's largest gold producer in March after completing the acquisition of Placer Dome. Inc.

Gold in New York gained the most since June on speculation that China will boost purchases of the precious metal to diversify its foreign-exchange reserves.

The dollar tumbled against the euro after Reuters reported the People's Bank of China may switch some of its currency reserves. Gold, sold in dollars, generally moves in the opposite direction of the dollar. The metal is up 23 percent this year while the U.S. currency fell 7.7 percent against the euro.

``China indicated many options are being considered, and the market is inferring some reserves will go into gold,'' said James Vail, who manages $800 million in natural-resource stocks at ING Investments LLC in New York.

Gold futures for December delivery rose $18.50, or 3 percent, to $636.80 an ounce at 1:25 p.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest gain for a most-active contract since June 30. Prices fell 1.5 percent yesterday.

``All central banks are trying to diversify,'' People's Bank of China Governor Zhou Xiaochuan said at a conference in Frankfurt. ``We have had a very clear diversification plan for several years.''

China is the tenth-biggest holder of gold reserves. About 1.3 percent of the country's reserves are gold and 72 percent of the reserves are U.S. assets. China's trade surplus with the U.S. helped drive the country's foreign currency reserves close to $1 trillion.

Dollar Weakness

``I'm worried about a weakening dollar and bullish on gold,'' said Thomas Au, principal at R.W. Wentworth & Co., a New York-based consulting company. ``Apparently, Mr. Zhou and company are, too.''

Gold opened higher as the euro rose earlier against the dollar on speculation the European Central Bank will raise interest rates faster than the Federal Reserve.

This year's 23 percent rally in gold would be the biggest since 2002, and prices have gained every year since 2001, moving in tandem with the euro from 2002 to 2004. Last year, gold gained 18 percent, even as the dollar rose 14 percent against the euro.

Gold also gained today on expectations international- investor demand for the dollar may drop after a shift in control of the U.S. Congress. Democrats took control of the House of Representatives after 12 years of Republican rule.

``With the change in Congress, and an inferred anti- business climate, the foreign investors are souring on the dollar,'' ING's Vail said.

`Inflationary Pressure'

Higher crude-oil prices also boosted gold's appeal as a hedge against energy costs, analysts said.

``When oil makes a big move up, it's going to be supportive for gold because of the inflationary pressures,'' said Tom Hartmann, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California.

Oil rose as much as 2.4 percent to $61.26 a barrel today in New York after gaining 1.5 percent yesterday.

Gold and oil often move together. Gold futures touched $873 an ounce in January 1980 after oil costs doubled in a year, sparking a surge in the inflation rate.

Price charts also indicated gold may climb, some analysts said. The metal has traded above its 200-day moving average since Nov. 1.

``Gold has taken on a life of its own,'' said Matt McKinney, a commodity broker at Infinity Brokerage Services in Chicago. ``If it gets any help from a weaker dollar or stronger oil, that would surely catapult it.''

Gold futures rose early Thursday, recovering part of their prior-day more than
$9-an-ounce loss as energy prices firmed and some of the worry stemming from the changing power structure in Washington eased.

Gold for December delivery was last up $6.90 at $625.20 an ounce on the New York Mercantile Exchange. The contract closed lower Wednesday as traders reacted to the Democratic Party sweep of Congress by consolidating recent gains.

"Despite yesterday's pullback the outlook remains positive, with oil holding above $58/barrel and the potential impact on the dollar following Tuesday's mid-terms," said James Moore, analyst at TheBullionDesk.com.


Meanwhile, the dollar traded mixed against major currencies, gaining against the yen but falling against the euro, after the Commerce Department said the U.S. trade deficit narrowed by 6.8% in September to $64.3 billion. Economists had expected a deficit of $66.3 billion. The U.S. trade deficit with China widened to a record $23.0 billion.

Separately, the Labor Department said prices of imported goods dropped 2% in October. Economists had expected prices to drop 1%.
Silver futures were last up 14 cents at $12.69 an ounce. Platinum rose $24.70 to $1,192 an ounce and palladium was up $3.70 to $332.10 an ounce. Copper added 2.85 cents to $3.273 a pound.

On the supply side, gold inventories were down 64 troy ounces at 7.53 million troy ounces as of late Wednesday, according to Nymex data. Silver supplies rose by 570,336 troy ounces to 107.4 million and copper supplies rose by 159 short tons to 25,664 short tons.

Gold prices fell in New York as some investors bet a four-week rally was overdone.

Before today, gold had gained 8.8 percent since Oct. 6 amid speculation a decline in the value of the U.S. dollar would boost investor demand in the metal. Gold's 4.7 percent gain last week was the biggest since mid-July. The metal is up 20 percent this year.

``We're seeing people getting out of length instead of real sellers,'' said Michael Guido, director of hedge-fund marketing at Societe Generale in New York. ``We've had a $56 rally so we're seeing some technical profit-taking in gold.''

Gold futures for December delivery fell $3, or 0.5 percent, to $624.70 an ounce at 10:45 a.m. on the Comex division of the New York Mercantile Exchange. Prices were little changed yesterday after dropping 0.2 percent the previous day.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

The seven-day relative strength index for gold futures has been above 70 the past six days, a signal to traders who look at historical charts that prices are poised to fall.

``Gold had a big move last week,'' said John Reade, an analyst at UBS AG in London. ``The key thing is if it does continue to slip lower whether we see physical demand below $620. If we don't, then prices are going even lower.''

Gold will touch $670 in the next three months, up from the previous forecast of $640, UBS said yesterday.

The gold market failed to rally even after the Democratic Party took control of the U.S. House of Representatives in yesterday's elections after 12 years of Republican control. Analysts had expected a Democratic win to weaken the U.S. dollar, which was little changed in New York.

``Speculators had positioned themselves for a weaker dollar and stronger gold,'' said Carlos Perez-Santalla, gold trader and president of Hudson River Futures in New York. ``People are bailing out of the longs after the market didn't rally after the Democrats won.''

Gold, sold in dollars, generally moves in the opposite direction of the U.S. currency, which is down 6.2 percent against six major currencies, including the yen, the euro and the Canadian dollar.

Shares of gold miners were mixed in Wednesday afternoon trading, as Merrill Lynch upgraded Goldcorp Inc. and NovaGold Resources Inc. again rejected a takeover bid from Barrick Gold Corp.

The overall CBOE Gold Index was down three-quarters of a percent, with six of 10 component stocks declining. Most percentage swings were slight, under 2 percent.

Gold for December delivery slipped $3.30 to $615 per ounce on the New York Mercantile Exchange.

Shares of Barrick lost 98 cents, or 3.3 percent, to $29.18 on the New York Stock Exchange.

The world's largest gold producer extended its offer of $16 per share for NovaGold to Nov. 21. NovaGold again urged shareholders to reject the offer, calling it undervalued.

The index's other big decliners were Freeport-McMoRan Copper & Gold Inc., down $1.73, or 2.9 percent, to $59, and Harmony Gold Mining Co., lost 45 cents, or 2.9 percent, to $15.22. Both trade on the NYSE.

Shares of Goldcorp, meanwhile, fell 13 cents to $26.30 on the NYSE, despite an upgrade from Merrill Lynch.

Analyst Michael Jalonen boosted the stock to "Buy" from "Neutral" and set a price target of $34, following its merger with Glamis Gold. In a research note, Jalonen wrote the newly combined gold producer will be the world's third largest by market capitalization and will benefit from above-average production growth and below-average cash costs.

RBC Capital Markets analyst Michael Curran kept his "Outperform" rating on Goldcorp, while writing in a research note that the new company has the best growth profile among tier one global gold producers.

Gold gained in Asia after Iran yesterday tested new cannon and rockets, increasing the precious metals appeal as a haven.


Gold for immediate delivery rose as much as $3.2, or 0.5 percent, to $626.40 an ounce. It traded at $624.80 at 11:20 a.m. Mumbai time.

``I could imagine we would see the $1,000 an ounce price in the next six to 12 months,'' said Christian Baha, founder and owner of Monte Carlo-based Superfund Asset Management GmbH. ``After a nice correction, I believe gold will go ahead with the bull market.''

Gold is trading 12 percent below its 26-year high of $730.40 an ounce.

Volumes are less than normal today as market makers and gold traders in Australia turn their attention to the annual Melbourne Cup horse race, said Investec's Heathcote. Melbourne, the second-biggest city in Australia, is closed for a public holiday for the race.

`Profit-Taking'

Analysts including Si Kannan expect there to be selling pressure once gold rises above $627 an ounce today.

``There will be some profit-taking at these levels,'' said Kannan, an analyst at Mumbai-based Sharekhan Commodities Pvt.

Gold futures for December delivery declined $0.5, or 0.1 percent, to $627.50 an ounce in after-hours trading on the Comex division of the New York Mercantile Exchange at 10:36 a.m. Mumbai time.

Bullion for October 2007 delivery declined 16 yen, or 0.7 percent, to 2,395 yen a gram, or 74,484 yen ($632) an ounce on the Tokyo Commodity Exchange at 2:29 p.m. local time.

In India, the price of the metal for December delivery fell 11 rupees, or 0.1 percent, to 9,137 rupees per 10 grams, or 28,416 rupees ($634) an ounce, at 10:56 a.m. Mumbai time on the Multi Commodity Exchange.

Gold rallied on speculation a decline in the value of the dollar will boost the metal's appeal as an alternative investment.

Gold, sold in dollars, generally moves in the opposite direction of the U.S. currency, which fell today against the yen on speculation Japan may raise interest rates. Gold is still up 21 percent this year, while the dollar has fallen 6.4 percent against six major currencies.

``The dollar is still a big influence on gold,'' said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. ``If you're watching gold, you need to watch the dollar.''

Gold futures for December delivery rose $2.60, or 0.4 percent, to $630.50 an ounce at 10:23 a.m. on the Comex division of the New York Mercantile Exchange. Prices gained 4.7 percent last week.

Bank of Japan Governor Toshihiko Fukui today pledged to ``take action in advance'' on monetary policy, suggesting the bank will increase its key interest rate from 0.25 percent. The central bank raised rates in July for the first time in almost six years. Federal Reserve officials have kept the benchmark U.S. interest rate unchanged at 5.25 percent for three consecutive meetings after a two-year tightening campaign.

``Holding the rate steady is giving us time to assess the full impact of our 17 rate increases and to see how economic conditions unfold over the near term,'' Cleveland Federal Reserve Bank President Sandra Pianalto said yesterday.


The Fed is trying to slow inflation without damaging an economy that expanded in the third quarter at the slowest pace since 2003.

A rate cut would weaken the dollar and send gold higher. Gold has made annual gains every year since 2001, more than doubling in the past five years. The dollar index rose last year, after three consecutive annual declines, as the Fed boosted rates to damp inflation.

``The Fed is neutral with a tightening bias,'' Lesh said. ``That's supportive for the dollar. But staying neutral isn't bad for gold.''

Still, gold has fallen 14 percent from a 26-year high of $732 on May 12. Some analysts remain skeptical gold can touch the May high again this year.

``Gold would still have to vault over $642 in order to yield a fresh sense of its year-end potential,'' said Jon Nadler, an investment-products analyst at Kitco Inc. ``After four solid weeks of gains, there may be a pause in the making.''

Gold has gained 8.9 percent since Oct. 6.

Gold moved higher on Tuesday to trade near two-month highs, supported by a weaker dollar, but investors remained cautious about building big positions ahead of U.S. congressional elections, dealers said.

Spot gold hit a high for the day of $626.25 an ounce and was quoted at $625.10/626.10 by 1106 GMT. It closed at $623.70/624.70 in New York late on Monday, when it touched $629.40 -- the highest since September 7.

"We have broken some key resistance in gold. We have held above that resistance and I think the medium-term prospect for gold -- the next two to three weeks -- is pretty good," said John Reade, London-based analyst at UBS Investment Bank.

"The best guess here is a period of consolidation for a few days. I don't see the ingredients in place to drive gold massively higher, anyway, simply because most of the investors are staying on the sidelines at the moment."

Gold probably needed more dollar weakness to move much higher this year, he added.

The dollar fell toward last week's one-month low of $1.2798 per euro and was last quoted at $1.2755 on jitters before U.S. congressional elections.

"Gold's recent correlation with oil and also with the dollar could generate further buying interest should further favorable movements emerge," James Moore, analyst at TheBullionDesk.com, said in a daily note.

Gold has jumped more than nine percent in the past two weeks, hitting physical demand for the metal in key consuming centers.

Relatively lower prices for most of October saw sales for Dubai's gold industry jump 25 percent during the month from a year earlier, the chairman of a gold and jewelry trade group in the Gulf emirate said.

PLATINUM DROPS

In other metals, platinum dropped to $1,172/1,177 an ounce from $1,190/1,195 in New York. On Friday, platinum spiked to its highest since September 11 at $1,213 on talk of a new platinum exchange-traded fund.

"Speculation over the possible launch of a platinum ETF has faded and that prompted profit-taking, but I think platinum will be supported as such speculation will stay," Takasahi Ogura, a manager at Kanetsu Asset Management, said.

Dealers will turn to next week's report by Johnson Matthey, the world's largest distributor of platinum, for clues on the demand-supply balance.

Palladium fell to $327/332 an ounce from $331/336, while silver edged down to $12.57/12.64 an ounce from $12.65/12.72.

These 1 month charts of NYMEX Gold Dec 2006 and NYMEX Silver 2006 show a dramatic price increase over the past month. Precious metal prices are often a leading indicator of future economic and/or political uncertainty.

Shares of gold miners were mixed in Monday afternoon trading, as an analyst downgraded Barrick Gold Corp., and Kinross Gold Corp. announced a $3.1 billion acquisition of a rival Canadian miner.

The overall CBOE Gold Index was flat, with seven of its 11 component stocks marking gains. Most percentage swings were slight, under 2 percent.

Hurting shares was the December gold contract falling $1.30 to $627.90 an ounce on the New York Mercantile Exchange.

BMO Capital markets analyst Geoff Stanley also downgraded Barrick Gold, the world's largest gold producer, to "Market Perform" from "Outperform." In a research report, Stanley wrote that he is cutting his target price to $38 from $42, due to expectations of higher 2007 cash costs and weakening medium-term production.

Barrick's U.S.-listed shares lost 47 cents to $30.40 on the New York Stock Exchange.

Canadian gold miner Kinross Gold Corp. said it's buying competitor Bema Gold Corp. in an all-stock deal valued at $3.1 billion. Kinross' U.S.-listed shares fell $1.07, or 8 percent, to $12.19 on the NYSE.

Bema's U.S.-listed shares jumped 52 cents, or 10.9 percent, to $5.30 on the NYSE, outside the index.

Among other big gainers in the index, U.S.-listed shares of South Africa-based miner Gold Fields Ltd. rose 43 cents, or 2.5 percent, to $17.90 on the NYSE.

Meridian Gold inc.'s stock added 63 cents, or 2.4 percent, to $26.43 on the NYSE.

Canadian gold miner Kinross Gold Corp. said Monday it's buying competitor Bema Gold Corp. in a $3.1 billion deal.

The purchase, which still needs Bema shareholder approval, would create a $7.9 billion gold producer with nine mines in five countries and 4,700 worldwide employees. Kinross' management team would lead the new company, which would have reserves and resources of 50 million ounces of gold, 80 million ounces of silver and 2.9 billion pounds of copper.

Under the deal, Bema stockholders would exchange each of their shares for 0.441 of a Kinross share, which offers a 34 percent premium compared to Bema's 20-day average price on the Toronto Stock Exchange. After the deal is completed, Kinross shareholders would own 61 percent of the new company, while Bema shareholders would own the balance.

Bema's U.S.-listed shares rose 44 cents, or 9.2 percent, to $5.22 on the New York Stock Exchange, where they've traded between $2.52 and $6.33 over the past year.

Kinross's U.S.-listed shares fell $1.24, or 9.4 percent, to $12.02 on the NYSE, where the stock has ranged between $6.67 and $15.39 over the past 52 weeks.

Gold hit a new two-month high on Monday before easing on a firmer dollar and weaker oil prices, but sentiment remained bullish on healthy technicals and geopolitical concerns, traders said.

Silver also traded off its two-month highs, while platinum retreated after surging the past week on speculation that an exchange traded fund could be launched.

"Some of the technical indicators have turned very strong," said Michael Widmer, metals analyst at Calyon Corporate and Investment Bank.

"With all the deceleration in U.S. economic growth, there could be further pressure probably on the dollar and that means that you should have further upward pressure on the gold price."

Gold was quoted at $624.20/625.20 an ounce by 1059 GMT after briefly touching a high of $629.40, the highest since September 7. It closed at $627.50/628.50 in New York late on Friday.

"We believe that gold has clearly regained its historical correlation with the U.S. dollar, and we continue to expect a weakening dollar to support a higher gold price," Goldman Sachs said in a research report.

It remained bullish on gold, but lowered its forecast for gold prices at the end of 2007 to to $750 from $800.

The dollar marginally gained against the dollar on Monday.

Traders said strong seasonal demand was also expected to underpin the metal.

"Gold tends to rise toward the end of the year when demand picks up ahead of the Christmas holiday season," said Hisaaki Tasaka, a market analyst at Ace Koeki Co. Ltd. in Tokyo.

In this bullish mood, investors are also focusing again on geopolitics, such as Iran's military exercises, to buy gold."

Iranian state radio said that Iran test-fired three new missiles on Friday, bringing the whole Gulf region within the range of the Islamic Republic's weaponry.

In other metals, platinum edged down but stayed firm. It fell to $1,183/1,189 an ounce from $1,198/1,204 in the U.S. market on Friday, when it rose to its highest since September 11.

"Barring any official confirmation, the rumors of a platinum exchange-traded fund should continue to underpin the market," Standard Bank said in a daily note.

An interim review next week by Johnson Matthey, the world's top platinum distributor, should also provide support to the metal as the report was expected to indicate demand outstripping supply in 2006 for the eighth consecutive year, the bank said.

Silver was trading at $12.48/12.55 an ounce, compared with $12.58/12.64, while palladium was at $330/335 an ounce, versus $328/333.

Gold opened higher in Hong Kong Monday at US$629.20 an ounce, up US$5.00 an ounce from Friday's close of US$624.2

Stronger gold prices helped Kinross Gold Corp. report a third-quarter profit on Friday.

Kinross, the world's eighth biggest gold producer, said it had earned $50.3 million, or 14 cents a share, compared with a year-earlier loss of $44.4 million, or 13 cents a share.

Before non-recurring items, including a gain on a disposal of assets and a non-cash writedown, net income was $44.8 million, or 13 cents per share.

The average realized gold price in the third quarter was $621 per ounce, compared with $440 per ounce in the same quarter a year ago, the company said.

The company produced 365,555 ounces of gold, down from 406,195 ounces in the same period a year ago.

It cost Kinross $321 to produce an ounce of gold, up from the same period last year.

The company said it expects to exceed previous annual production estimates of 1.44 million ounces by about 20,000 ounces.

Shares of gold miners rose slightly in Friday midday trading, as HSBC said shares of world's largest gold producer Barrick Gold Corp. continue to look attractive.

The overall CBOE Gold Index rose 1.2 percent, with 10 of its 11 of its component stocks marking gains, most of them modest. Hurting shares was the December gold contract falling 80 cents to $627 an ounce on the New York Mercantile Exchange, snapping two consecutive days of gains.

Shares of Barrick added 2 cents to $30.89 on the New York stock Exchange, as HSBC analyst Victor Flores reiterated an "Overweight" rating and $40 target-price for the stock. Earlier in the session, the shares climbed as high as $31.10.

Barrick on Thursday reported its third-quarter profit nearly tripled. Flores wrote in a research report that excluding special items, the results beat his and the Street's overall expectations. He also said lower production in 2007 by Barrick "does not particularly worry us," as long as profitability is not affected.

Among the index's bigger gainers, Glamis Gold Ltd. added 95 cents, or 2.2 percent, to $44.93 and AngloGold Ashanti Ltd. rose 65 cents to $43.17, both on the NYSE.

Gold advanced for a ninth session in London, matching its longest rally in 20 years, on trader expectations of further declines in the dollar, increasing the metal's allure as an alternative investment.

Investors have bought almost 500,000 ounces of gold since Oct. 30, based on assets in five gold exchange-traded funds including Lyxor Gold Bullion Securities on the London Stock Exchange. Gold has climbed 7.7 percent since Oct. 23, as the U.S. currency headed for a third weekly loss against the euro and yen.

Investor demand ``has picked up in the past couple of days,'' Simon Weeks, head of precious-metals trading at ScotiaMocatta in London, said in a telephone interview. ``It suits people to be bearish dollar and bullish gold.''

Gold for immediate delivery rose $1.80, or 0.3 percent, to $626.50 an ounce at 11:56 a.m. in London. The last time prices rose for nine straight days was in June 1986, when gold was trading at around $345 an ounce. Prices are up 4.4 percent this week, heading for their fourth weekly gain and the biggest advance since mid-July.

The five exchange-traded funds have 16.3 million ounces, up 3.1 percent from 15.8 million ounces on Oct. 30, according to the Web site of Exchange Traded Gold.

The dollar traded at $1.2777 against the euro.

Gold futures climbed Thursday to their highest level in nearly two months, on the heels of a 2% gain in the previous session as weak U.S. economic data pushed the dollar lower against major currencies, spurring investment demand in gold.

Gold for December delivery was up $4 at $623.30 an ounce on the New York Mercantile Exchange after trading as high as $624.80, the contract's strongest intraday level since Sept. 7. Prices climbed $12.50, or 2.1%, on Wednesday.

Gold's close Wednesday "above the 100 & 200-day [moving average] and clearance of the $608-$612 chart congestion leaves the metal well placed for further gains with upside resistance pegged at $625 and potentially $645," said James Moore, an analyst at TheBullionDesk.com

But that's "barring any sudden collapse in the price of oil or surge in the dollar from tomorrow's non-farm payrolls reading," he said in a note to clients.

Gold found support as The dollar fell against the euro and yen. The U.S. Labor Department report showed lower than expected productivity growth in the third quarter and the European Central Bank kept interest rates on hold as expected.

Rounding out action in the metals pit Thursday, December silver futures climbed 13.5 cents to $12.61 an ounce after rising more than 20 cents in the previous session.

January platinum was up $28.30 at $1,129 an ounce, extending Wednesday's over $14 gain, while December palladium rose $2.70 to trade at $326.80 an ounce.

Gold fell in London after prices rose for seven consecutive trading sessions and to a seven-week high, prompting caution among investors.

Gold rose to a 26-year high of $730.40 an ounce on May 12 and then plunged to $542.45 on June 14 on expectations the U.S. Federal Reserve would signal the need to raise interest rates to contain inflation. The metal has stayed above $600 for two days, the longest stretch since early September.

``Of course there's going to be some cautiousness out there because in recent history gold wasn't able to hold above the $600 level,'' said Philip Newman, a senior metals analyst at London- based metals research company GFMS Ltd. ``Having said that, we still think the dollar will weaken and gold will move higher.''

Gold for immediate delivery fell $1.20, or 0.2 percent, to $616.40 an ounce at 10:52 a.m. in London. Prices yesterday climbed to $619.80, the highest since Sept. 7.

Before today, gold climbed 6.1 percent since Oct. 23. The gains indicated the Federal Reserve ``will start to lower rates because it doesn't want to have a recession,'' Newmont Mining Corp. President Pierre Lassonde said yesterday.

A slowing U.S. economy has weakened the dollar and increased demand for gold as an alternative investment. As of Oct. 31, five gold exchange-traded funds including the Lyxor Gold Bullion Securities on the London Stock Exchange had record assets of 15.83 million ounces, worth about $9.46 billion, from 15.57 million a month earlier, the producer-funded World Gold Council said yesterday.

`Highly Encouraging'

``I would say the three-week run we've had is highly encouraging and we anticipate more of it before year end,'' said Andrew Pullar, an analyst at Baker Steel Capital Managers LLP, a London-based investment company with about $550 million under management including gold stocks Nevsun Resources Ltd. in Vancouver, Johannesburg-based DRDGold Ltd. and Newcrest Mining Ltd., Melbourne. ``Some commentators are forecasting gold will be around $700 by year end and we certainly are positioning our portfolio to take advantage of it.''

Gold has gained 19 percent this year as the dollar dropped more than 7 percent against the euro.

``Gold will trade between $570 and $630 till interest rates are not reversed in the U.S. and European countries,'' said Ajoy Pathak, associate vice president at Kotak Commodity Securities Ltd. in Mumbai.

Gold prices surged above $620 an ounce Wednesday, sparking gains among the gold mining equities.

The price of gold for December delivery advanced $10.60 to $623.50 an ounce at midday on the New York Mercantile Exchange.

"That gold managed to get above $610 and stay there prompted more people to come in and buy the metal and spooked off people who were considering selling," said HSBC analyst Victor Flores.

Barrick Gold Corp., the world's largest gold producer, saw its shares rise 55 cents to $31.55 on the New York Stock Exchange. Goldcorp Inc. shares added 23 cents to $26.51.

Newmont Mining Corp. reported third-quarter profit jumped 57 percent due to a sharp rise in gold prices, compared with the prior year. The company's stock rose $1.11, or 2.5 percent, to $46.38 at midday on the New York Stock Exchange.

Silver prices also rose, as did silver miner stocks. The metal gained 19 cents to $12.46 an ounce on the Nymex.

Pan American Silver Corp. shares picked up 45 cents, or 2 percent, to $22.61 on the Nasdaq, while Silver Wheaton Corp. shares rose 15 cents to $11.15 on the New York Stock Exchange.

Newmont Mining Corp. on Wednesday said third-quarter profit rose as high gold prices outweighed lower production at some of its big mines.

Net earnings were $198 million, or 44 cents per share, compared with $126 million, or 28 cents per share, a year earlier, the Denver-based company said.

Analysts had expected, on average, 41 cents per share, according to estimates compiled by Reuters Estimates.

In July, Newmont warned that sales were likely to be lower in the third quarter than in the fourth quarter as costs for energy and labor rose. It also cited the loss of business in Uzbekistan and lower output in Ghana and Peru.