Gold futures climbed Wednesday, sending their benchmark contract above $676 an ounce for the first time in six months and gaining momentum from Ben Bernanke's statement that inflation pressures were easing.

Gold prices returned to the $670 value zone once again "as traders monitored a declining dollar and were further encouraged by today's milder tone on inflation" by Federal Reserve Chairman Ben Bernanke, said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.

Gold for April delivery rose $3.50 to close at $672 an ounce on the New York Mercantile Exchange. It climbed as high as $676.40 earlier, its strongest intraday level since Aug. 2, which saw a peak of $677.10. On Tuesday, gold prices closed up $1.20.

A close above the $675-$676 spot price target "should give confirmation that $700, and then the $730 levels, are the next objectives," said Peter Spina, chief investment strategist at GoldSeek.com.

"Yet along with general profit taking below the technical breakout level along with some Spina cited "strong hands which appear to be working overtime to keep this rally from extending." He added, in e-mailed comments, "it is unclear if they have the power to spook investors from taking this market higher at this time or require some more consolidation just below."

The dollar fell across the board Wednesday, hitting a six-week low against the euro after Bernanke said inflation pressures are easing.

In his remarks before the Senate Banking Committee, the Federal Reserve chairman also said that the central bank is comfortable with rates at their current levels but stressed that further rate hikes could occur if the inflation outlook worsens.

Also putting pressure on the dollar, the Commerce Department said seasonally adjusted retail sales were unchanged in January, against expectations of an increase of 0.6%. Sales excluding autos rose 0.3% vs. forecasts of 0.5%.

The continuing slide in the dollar is boosting demand for gold, traditionally seen as a safe-haven investment.

"Gold's internal strength continues to shine on its march to $700," said Peter Grandich, editor of the Grandich Letter, in e-mailed comments. "We could see a groundswell of momentum players join in above $675 that could lead to a major spike to $725-$735 faster than most would believe."

Elsewhere on the commodity markets, crude-oil futures, which have provided most of the direction for gold recently, dropped Wednesday after U.S. dollar revealed that distillate supplies fell much less than expected last week, despite the severe winter weather in much of the nation.

Most other metals prices climbed, with March silver touching a two-month high of $14.13 an ounce before closing at $13.965 an ounce, up 5 cents.

April platinum climbed 0.9%, or $11.10, to end at $1,217.10 an ounce and March palladium added $1.25 to close at $345.85 an ounce.

March copper saw a slight loss, closing down 0.75 cent at $2.577 a pound.

On the supply side, gold inventories dropped 101 troy ounces to stand at 7.49 million troy ounces as of late Tuesday, according to Nymex data. Silver supplies were unchanged at 115.43 million troy ounces and copper stockpiles dropped 286 short tons to 35,903 short tons.

The DJ Wilshire Nonferrous Metals Index was up 0.4% at 6,281.02 points. The DJ Wilshire Industrial Metals Index was nearly unchanged at 3,670.98 points and the DJ Wilshire General Mining Index rose 0.9% to 1,312.72 points.

"Citigroup has released two separate reports recently on the gold market and gold-mining companies," according to Neal Ryan, director of economic research at Blanchard.

"In the first, they are expecting the gold price to rise above $700 per ounce in the coming months and have made a suggestion to Barrick Gold Corp. that the company should remove their entire existing hedge position from the market," Ryan wrote in a note to clients.

"It was only a matter of time before analysts began putting pressure on hedged-mining companies to begin aggressively reducing these positions from the market," Ryan wrote. "Just the potential that another +20 million ounces of hedges could come off the market via large book reductions from a handful of companies, has extremely bullish implications in the market for gold prices moving forward."