COMMODITIES : Gold Nears Recent Highs but Reasons Are Unclear

Precious metals futures moved higher Tuesday, with gold prices approaching recent highs.

While there was little on the world financial or political scene to account for the strength, the move put gold in a position to break out of its trading range, analysts said.

On other markets, pork belly futures took a nose dive, grains and soybeans were mixed and crude oil was a little higher.

“The price action of gold was very good, but it came out of left field,” said Craig Sloane, an analyst in New York with Smith Barney, Harris Upham & Co. “There wasn’t any real news; no action in other markets that would warrant it.”

However, he noted that the gold contract for delivery in April reached a high of $448.30 an ounce at the New York Commodity Exchange.

“This is very close to the highs that were made during a recent consolidation phase when it traded between $440 and $450,” he said. Prices had dropped into the mid-$420s last month.

‘Nice Recovery’

Sloane said prices are not likely to break beyond $450 today, one day ahead of the release of the January balance of trade data.

“But whenever it gets this close to the top of the range, you have to treat it with some respect,” he said.

“Metals have made a nice recovery from the lows of a few weeks ago,” said Sloane. “They’re well positioned to make a nice move. If we do get favorable trade data, prices have almost nowhere to go but to break out.”

Gold settled $4.40 to $5.10 higher with the contract for delivery in April at $447.50 an ounce. Silver was 12.5 cents higher with March at $6.365 an ounce.

Sharp Retreat

Pork belly futures retreated sharply at the Chicago Mercantile Exchange under data indicating there may be burdensome supplies in the summer.

“Bellies collapsed late in the day following a report of a big movement into storage,” said Philip Stanley, an analyst in Chicago with Thomson McKinnon Securities Inc.

Cattle futures were weakened by profit taking, said Stanley.

Grain and soybean futures prices were mixed on the Chicago Board of Trade. It was a sluggish session with little price movement in either direction.

Crude oil futures moved a little higher, but the market remained confused and cautious, said Peter Beutel, an analyst in New York with Elders Futures Inc.

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