COMMODITIES : Gold Rises in Muted Rally on Latest Inflation Fears

Renewed fears of inflation gave gold futures prices another lift Thursday, but the rally was checked by the bearish sentiment that has controlled the market for more than a month.

On other markets, grain, livestock and energy futures were mixed.

Gold futures settled $3.80 to $5.50 higher on New York’s Commodity Exchange, with the contract for delivery in April at $394 an ounce. Silver was 0.5 cent higher to 0.5 cent lower, with March at $5.935 an ounce.

The session marked the third straight day of gains for gold and brought prices to their highest levels in two weeks. Gold for spot delivery finished at $391 an ounce, its first close above $390 since Feb. 9.

But the rally was less than satisfying for market bulls, who had bid April gold up as high as $396.20 during the session. March silver rose 11 cents in morning trading, only to finish on a down note.

The morning rally reflected a flow of investment dollars into precious metals, a traditional hedge against inflation, due to two government reports during the past week.

On Feb. 10, the Labor Department reported that wholesale prices had shot up by 1% in January. On Wednesday, the government reported that consumer prices had risen by 0.6% during the same month.

The gold market shrugged off the first report on expectations that the Federal Reserve Board would force interest rates higher to slow the economy’s growth and reduce inflationary pressures.

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