Gold was rebounding Monday after a day of major losses at the end of last week, helped along by rising oil prices.
Contracts for April delivery of bullion were tacking on $4 at $655.50 an ounce on the Comex division of the New York Mercantile Exchange. The PowerShares DB Gold (DGL) exchange-traded fund, which tracks futures prices, was moving ahead also, up 0.5%.
The bullion ETFs, streetTracks Gold Shares (GLD) and iShares Comex Gold Trust (IAU) followed suit, up 0.4% and 0.3% respectively.
Friday saw spot gold prices plunge to about $646 from $660 a day before as higher prices increased the supply of scrap jewelry, according to a report from Montreal bullion dealer Kitco. Prices have climbed from about $608 in early January.
In the energy markets, crude futures were adding 60 cents at $59.62 a barrel on the Nymex. Oil is seen as a key driver of inflation, and some investors use gold as a hedge against a generally rising price level.
Data showing better-than-expected growth in the Institute for Supply Management's nonmanufacturing index caused a fleeting pullback for gold, but the weakness quickly dissipated.
" [The index is] still above the norm as strength in the services sector bodes well for the U.S. economy," writes Randy Diamond, an analyst at Miller Tabak, in a research brief. Even though parts of the index pointed to softness, overall "the current composition of U.S. economic growth is desirable for continued economic expansion."
The greenback was mixed in midmorning trading. One dollar would buy 120.42 yen, down from 121.04 late Friday. One euro would purchase $1.2926, down from $1.2967 last week. The price of gold and the U.S. currency tend to move in opposite directions.
Elsewhere, the Economic Cycle Research Institute also reported some promising data, with its weekly leading index growing 4.7% in the period ended Jan. 26, marking its 15th consecutive uptick. The statistics continue to show an accelerating trend, or one where the rate of growth is getting faster, and that should mean a strong U.S. economy and a robust dollar going forward.
On the technical side of the equation, at least one chart-watcher seems anxious for a breakout.
"We will not begin another leg up in the gold bull market until we see gold make a sustainable rally above $700 and the [ Philadelphia Gold and Silver Sector Index] stay above 160 for over a week," writes Mike Swanson, a Virginia-based hedge fund manager and editor of the Wall Street Window blog.
He sees current support for the index at 134 and resistance at 142. Swanson says the charts show a pennant, or triangle formation, developing in the index, suggesting an increasingly tight trading range that will be followed by a significant advance or decline.
The Philadelphia Gold and Silver Sector Index was recently rising 0.2% at about 139, buoyed by the higher metal price.
Component stocks Pan American Silver (PAAS) and Agnico-Eagle Mines (AEM) were both up about 1.3%.
Elsewhere in the precious-metals patch, BMO Capital Markets upgraded shares of exploration company Minefinders (MFN) to outperform from market-perform, sending the stock up almost 5%.
Turning to base metals, Comex copper contracts were adding 2 cents at $2.44 a pound.
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