Media Coverage

Gold futures fall from a seven-week high, but hold ground above $690

SAN FRANCISCO (MarketWatch) -- Copper futures rallied Tuesday, with concerns over potential supply disruptions from Freeport-McMoRan Copper & Gold's Grasberg mine in Indonesia lifting prices for the benchmark May contract to its highest level ever in New York.

Meanwhile, gold futures closed lower, pulling back from the high of $695.50 an ounce it reached during the session, which marked the June contract's highest level in seven weeks.

Copper supplies in London headed lower, with London Metal Exchange warehouse stocks last down 2,575 metric at 172,025, the lowest since mid-December, according to Martin Hayes, an analyst at BaseMetals.com.

At the same time, workers from Freeport's Grasberg mine called off planned talks with the company on Tuesday and said they would go ahead with a protest rally over better welfare for native workers, he said. Overnight, Freeport had said it was optimistic the meeting with disgruntled Papuan workers would head off the protest, he said.

Against this backdrop, copper for May delivery climbed as high as $3.6925 a pound on the New York Mercantile Exchange. That's an intraday level never before seen for the contract. It closed up 3.9%, or 13.75 cents, at $3.677.

Tuesday afternoon, "the market has rallied on fund buying, against a background of benign U.S. inflation data," said Hayes.

Gold pull back
Gold futures took second billing Tuesday, easing back after Monday's climb.
June gold fell $2 to close at $692.50 an ounce on Nymex. On Monday, gold futures closed up 0.7%, adding $4.60 to stand at $694.50 an ounce, the highest close since Feb. 26.

"Some participants cashed in their chips," explained Jon Nadler, analyst at Kitco Bullion Dealers.
"Some traders feel that there may be more consolidation ahead before gold prices manage to break the psychologically important $700 mark," Action Economics said in a research note.

James Moore, metals analyst at TheBullionDesk.com, said gold "appears to be catching its breath."
However, "momentum is still firmly to the upside with further diversification away from the dollar looking set to propel gold through $700 and on to challenge the $732 high we saw last May," Moore said in a note to clients.

Weakness in the dollar did little to support the gold market Tuesday.
The dollar dipped after a Labor Department report showed U.S. core consumer inflation rose 0.1% in March, lower than a 0.2% gain expected by economists. The headline consumer price index rose 0.6%, versus expectations for an increase of 0.7%. The euro was up 0.3%, and the dollar was down 0.4% vs. the yen. The dollar fell to a 15-year low against the British pound, breaching the $2 level.

An earlier climb in crude-oil prices also did little to help gold. Crude futures eased back in late trading Tuesday, but earlier on in the session it was underpinned by worries over problems at U.S. refineries, unrest in Nigeria and declining gasoline supplies ahead of the summer driving season.