Gold hit a one-month high on Thursday after data showed US unemployment benefits' claims fell less than expected, bolstering expectations the Federal Reserve will delay scaling back monetary stimulus. Spot gold rose as much as 1.2 percent to its highest since September 20 at $1,348.24 an ounce just before the US data was released. By 1346 GMT it was up 0.9 percent at $1,343.41, while US gold futures for December delivery were up $9.30 an ounce at $1,343.30.
"A lot of people positioned themselves for a lower figure (than the previous week) just ahead of the jobs release and prices were pushed higher," MKS SA senior vice president Bernard Sin said. "Overall, gold should be supported in the short term, especially if US data keeps falling short of expectations ... that should put further pressure on the dollar and reinforce the argument for the Fed to keep its stimulus." The dollar remained weaker against a basket of currencies, having earlier hit a two-year low versus the euro, while US Treasury yields traded near three-month lows. Global shares also edged higher.
Gold fell to a near three-year low in June on speculation that the Fed was set to curb its stimulus programme, which would reduce inflation risk. A two-week US government shutdown this month increased expectations that the Federal Reserve will delay such a move until next year and helped to lift gold earlier this week. Ultra-loose monetary policy from various central banks helped to push gold prices to record highs in the wake of the financial crisis as it kept interest rates - the opportunity cost of holding non-yielding gold - low, while stoking fears of inflation.
Goldman Sachs said it expects gold prices to fall to $1,144 an ounce in 2014, driven by improving US economic data, rising real rates and the commencement of tapering of US monetary stimulus. Positive manufacturing data from China, the world's second-largest gold consumer, also helped to support prices of the precious metal on Thursday as it drove oil and stock markets higher.
In the physical market, jewellers who had chased bullion at about $1,310 an ounce held off further purchases as prices rose, but dealers expected gold demand in top consumer India to pick up ahead of the Diwali festival of lights in November. A shortage of gold triggered by the government's move to curb imports and control a rising trade deficit has sent premiums in India to more than $100 an ounce over London prices this month. Among other precious metals, silver was up 1 percent at $22.71 an ounce, while spot platinum also rose 1 percent, to $1,444.99 an ounce, and spot palladium edged 0.1 percent lower to $743.22 an ounce.
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