US gold futures easily surpassed the key $700 an ounce target to set a 4-month high on Thursday as funds bought gold in droves, and traders cited reasons ranging from a soft outlook for Friday's US jobs data to strong physical demand and a weaker dollar for the buying.
"For most of this week we've seen fund buying. Today it was just steady, consistent buying. As we broke through some key levels there were some stops triggered, as well," said Paul McLeod, vice president of precious metals at COMMERZBANK. While he noted strong physical demand also pushed gold higher, he said fund buyers were the price drivers.
A number of other reasons were cited for gold's rally, from higher oil prices, which draws those looking for an inflation hedge, and dollar declines, which attracts investors holding other currencies to dollar-denominated gold.
On Friday at 0830 am August US payrolls data is due and is projected by analysts to show tepid gains. If job growth comes in as expected, it may support calls for the US central bank to cut the key overnight rate.
An interest rate cut tends to weaken the dollar and spurs flight-to-quality purchases. Crude oil rose above $76 per barrel after a drop in US gasoline and crude inventories stoked fears of a fuel shortage this winter in the world's biggest consumer.
Renewed tensions in the Middle East, when Syria accused Israel of bombing its territory, also helped drive oil prices up and spurred flight-to-safety gold purchases. Spot gold surged to a 16-month peak at $697.70. It was trading at $695.70/696.30 an ounce late in New York, above on Wednesday's $681.40/682.0. London bullion was set at $688.15.
Comex December silver settled 17.80 cents lower at $12.5330 an ounce, after hitting $12.67, last seen on August 16. Spot silver soared to $12.42/12.45 an ounce, up sharply from $12.19/12.22 an ounce late on Wednesday. It set a high at $12.52 an ounce, a level dating back to August 16.
The London silver fixes rose to $12.2450 per ounce. Nymex October platinum advanced $15.90 to close at $1,288.90 an ounce. Spot rose to $1,284.50/1,291.50. December palladium increased $3.55 to end at $340.40 an ounce. Spot palladium rose to $333.0/337.0.
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