Gold gained traction above $990 per ounce on Thursday as the dollar index weakened after US weekly jobs data, while rising oil prices also gave the metal a lift as a potential inflation hedge. Bullion still faced a struggle to regain the $1,000 psychological level, however, with some traders expressing disappointment at the market's inability to sustain this week's stunning run to 18-month highs at $1,007.45.
Spot gold was bid at $992.40 an ounce at 1541 GMT compared with $991.15 late in New York on Wednesday, having touched a low of $982.10 in earlier trade. "The resumption of dollar weakness has been supportive. The oil market has also gotten a little succour from the IEA report, and oil helped to stiffen gold," HSBC metals analyst James Steel said.
Gold has found favour as a hedge against the potential for oil-induced inflation, and Steel said while that argument was keeping prices firm, the reality of price rises may not materialise. Gold rallied above $1,000 an ounce for only the third time in history on Tuesday after breaking a number of key technical resistance levels. News Barrick Gold was cutting its hedgebook of forward gold sales fuelled gains.
Traders say they are waiting to see whether the gains that took gold above $1,000 an ounce can be sustained. If the metal seems vulnerable at higher levels, selling is likely to gain momentum. Heraeus' head of sales Wolfgang Wrzesniok-Rossbach said gold had struggled to establish itself at higher levels. US gold futures for December delivery on the COMEX division of the New York Mercantile Exchange fell $3.10 to $993.80 an ounce.
Among other precious metals, silver rose to $16.43 from $16.27, platinum was at $1,277.00 against $1,276.00, while palladium eased to $288.50 from $290.50. ETF Securities said holdings of its London palladium-backed exchange-traded fund rose 5.5 percent to a record 477,766 ounces, while its gold and silver-backed products also recorded inflows.