Gold Spurred On by Jeweler Purchasing, Feb. 9

When gold fell February 7th by a decline of 3.8%, seeing the biggest decline in prices in over eight years, purchasing of the metal began to take off. With the demand in China already rising, gold purchasers saw this as an ideal opportunity to pick up the pieces, while the price was right.

As a market reaction to this event, according to sources at Bloomberg, "Gold for immediate delivery rose as much as $8.22, or 1.5 percent, to $559.67 an ounce. It traded at $558.59 as of 10:20 a.m. local time. "

Federal Reserve Chairman Alan Greenspan was quoted as saying that last week's high commodity prices had less to do with inflation and high commodity prices. It was implied that investors are buying gold as a haven due to "threat of international conflict."

Bloomberg, Feb. 7

Gold Falls Most Since '04 as Oil's Drop Eases Inflation Concern

Feb. 7 (Bloomberg) -- Gold fell the most in two years in New York after a drop in the cost of oil eased speculation that inflation will accelerate and erode the value of assets including equities.

Before today, gold had surged 38 percent in the past year, reaching a 25-year high of $579.50 on Feb. 2, as rising energy prices increased the precious metal's appeal as a hedge against inflation. Crude oil fell today on speculation U.S. oil supplies are large enough to cushion the market from any disruption in supply from Iran, the world's fourth-largest producer.

``The oil market started this all off and gold was reacting in kind,'' said Brian Hicks, who helps manage $3.2 billion at U.S. Global Investors Inc. in San Antonio. ``We saw a lot of fund buying in January and we knew that was going to taper off at some point. We've clearly lost some momentum.''

Gold futures for April delivery fell $19.50, or 3.4 percent, to $554.80 on the Comex division of the New York Mercantile Exchange, the biggest drop since January 2004.

Gold for immediate delivery in London fell $18.70, or 3.3 percent, to $551.20, the biggest drop since April 2004, after falling to $550.35. The metal has gained almost 7 percent this year, after advancing 18 percent last year.

"Gold is forecast to average $618 a troy ounce in 2006 - with a high of $760 an ounce, and a low of $520.75 - according to UK-based consultancy TheBullionDesk.com. With Ross Norman from TheBullionDesk.com."

From the La Times, Tuesday February 6th.

Tuesday's Metal Prices
By The Associated Press
NEW YORK — Spot nonferrous metal prices Tuesday


Aluminum - 117.7 cents per lb., London
Copper - 239.00 cents Cathode full plate, U.S. destinations. Copper 228.75 cents per lb., N.Y. Merc spot Tue. Lead - $1303.00 per metric ton, London Metal Exch.
Zinc - 112.08 cents lb., delivered.
Gold - $558.70 Handy & Harman (only daily quote).
Gold - $551.00 troy oz., NY Merc spot Tue.
Silver - $9.420 Handy & Harman (only daily quote).
Silver - $9.380 troy oz., N.Y. Merc spot Tue.
Mercury - $700.00 per 76 lb flask, N.Y.
Platinum -$1075.0 troy oz., N.Y. (contract).
Platinum $1061.70 troy oz., N.Y. Merc spot Tue. n.q.-not quoted, n.a.-not available r-revised