Gold rose on Thursday to its highest price since July 1, rallying for a sixth day as disappointing US jobless claims data rekindled economic fears, sent stock markets lower and prompted investors to buy gold as a safe haven.
Gold rose on Thursday to its highest price since July 1, rallying for a sixth day as disappointing US jobless claims data rekindled economic fears, sent stock markets lower and prompted investors to buy gold as a safe haven.
Silver and platinum group metals fell after data showed new claims for US unemployment benefits unexpectedly climbed to a nine-month high last week, and as the Philadelphia Federal Reserve Bank said regional factory activity unexpectedly contracted in August.
"Whenever there is any uncertainty in the marketplace, people tend to put their money in gold," said Jeff Pritchard, trader at futures brokerage Altawest.
Gold initially rose toward $US1,240 an ounce, but the rally fizzled as losses in US stocks deepened, prompting some investors to sell gold to cover margin calls. The S&P 500 index dropped about 1.5 per cent.
Spot gold was at $US1,231.15 an ounce at 3:11 pm EDT (0411 AEST), up from $US1,227.55 late in New York on Wednesday.
US gold futures for December delivery settled up $4 at $US1,235.40 in thin volume.
A six-day rally has gold just $30 below its all-time high at $US1,264.90 set on June 21. Traders cited strong physical demand, which tends to rise in August as jewelers stockpile inventory ahead of the wedding season in top consumer India.
Turnover in COMEX gold futures remained quiet in the summer months, near a one-year low set on Tuesday, preliminary Reuters data showed.
Bruce Dunn, vice president of trading at New Jersey-based Auramet Trading, said bullion's early gains were driven by technical buying, but light trading volume suggested it did not take many buyers for prices to rally.
The US dollar fell against a basket of currencies after the lacklustre job data, but the dollar turned higher as investor risk appetite fell.
Gold has been resuming its traditional inverse correlation with the dollar and a positive link with the euro, analysts said, but the link remained erratic as the dollar and gold both benefited from safe-haven flows at times.
The 25-day simple correlation between gold and the dollar fell to a plus 0.1 on Thursday, sharply lower than a high of near 0.9 earlier in August.
Concerns over the prospect of sluggish growth have raised investors' appetite for bullion as a haven from uncertainty in wider markets. This has been reflected in a rise in holdings of the world's largest gold exchange-traded fund.
New York's SPDR Gold Trust said its holdings on Wednesday rose just under 1 tonne to 1,295.516 tonnes, their highest since July 27.
ETF Securities, a London-based provider of exchange-traded products backed by precious metals, said in a weekly report that inflows into its physically backed gold products had hit a 13-week high.
Gold's technical outlook looked more positive, analysts said, although strong pockets of resistance remain.
CitiFX strategists said spot gold could run into technical resistance at $US1,240, the 76 per cent Fibonacci retracement level. They said momentum divergence on monthly charts looked similar to that seen in late 1974-early 1975 before a sharp correction.
Among other precious metals, silver was at $US18.28 an ounce against $US18.32, platinum was at $US1,524.50 an ounce versus $US1,527 and palladium at $US483 versus $US486.50.
The ratio of platinum to gold -- or how many ounces of gold were needed to buy an ounce of platinum -- fell to a 1-1/2 month low at 1.24 on Thursday, as the yellow metal's rise made it comparatively more expensive.
