Gold rose to a two-month high on Thursday on a larger-than-expected fall in new US claims for unemployment benefits, but analysts said bullion could pull back if Friday’s US jobs report disappoints.
Bullion climbed for a third consecutive day, reversing initial losses after encouraging jobless claims data pointed to a recovery jobs market, ahead of the closely watched January US nonfarm payrolls report on Friday.
The precious metal is up nearly 12 per cent this year as gains accellerated after the US Federal Reserve said last week it expects to hold interest rates near zero until late 2014.
“If you get a disappointing nonfarms tomorrow, you may see a flight into short-term market US dollar securities. That tends to create a corrective action in stocks and in precious metals,” said Richard Hastings, macro strategist at investment bank Global Hunter Securities.
Spot gold was up 0.7 per cent at $US1,755.80 an ounce by 2.07pm (0607 Friday AEDT), having earlier peaked at $US1,760.70, its loftiest since December 2.
US gold futures for April delivery settled up $US9.80 an ounce at $US1,759.30. Trading volume was about 20 per cent below its 30-day average but largely in line with recent pace.
Gold’s rally this week prompted investors to buy upside exposure through either outright calls, call spreads and other out-of-money bullish strategies, COMEX floor traders said.
Silver was up 1.6 per cent at $US34.23 an ounce.
US employment growth is likely to slowed in January as temporary workers hired during the holiday shopping season were laid off, but the improving labour market trend should remain intact. A Reuters survey shows nonfarm payrolls to rise 150,000 in January after increasing 200,000 in December.
“We expect gold to reach new highs in 2012, although episodes of extreme risk aversion may trigger corrections along the way,” said Anne-Laure Tremblay, an analyst at BNP Paribas.
Tremblay said the recent rebound in risk appetite has encouraged gold buying, and anecdotal evidence suggests that bar and coin demand remains high in the US and Europe.
Gold rose in the face of a rise of the US dollar against the euro. The correlation between gold and the euro has been erratic so far in 2012.
Worries over the euro zone debt crisis had driven gold higher for much of last year, but the metal mostly followed the single currency lower in late 2011.
The market largely ignored official data showing gold output in China, the biggest global producer of bullion, rose to a record 360.95 tonnes last year. Its domestic demand for gold far outstripped that figure, however.
Platinum group metals rose on news US auto sales rose more than 11 per cent in January, a surprisingly robust showing that marked the strongest annualised sales rate for the industry in nearly two-and-a-half years.
Spot platinum was up 0.8 per cent at $US1,624.49 an ounce, while spot palladium was up 1.5 per cent at $704.47 an ounce.
Platinum has outperformed gold so far this year, rising 16 per cent since the end of December. The metal, mostly consumed by the car industry for use in catalytic converters, has taken support from expectations that South African production could be disrupted this year by mine stoppages.