Gold prices were volatile on Thursday, and with an overall upward movement, building on gains seen earlier in the week to reach a one-month high.
Prices briefly climbed as high as $2,060 an ounce by late Thursday afternoon, having earlier traded as low as $2,030 an ounce. That was the highest price since early January.
The markets appeared to react to US data which cast doubts over the strength of the economy.
The number of Americans claiming unemployment benefits rose for a second consecutive week to 224,000 in the week ending January 27th, according to data released Thursday, compared with an expected 212,000. More people out of work indicates a cooling economy, raising the chances of the US Fed cutting interest rates to stimulate growth, in turn providing a lift for non-interest-bearing assets like gold.
However, the effect of the jobless claims figures was mitigated slightly by the US ISM Manufacturing PMI figures, which came in stronger than expectations, albeit still showing a slight contraction in the US manufacturing sector.
The choppier conditions and overall gains this week were also linked to news flow amid ongoing tensions in the Middle East, which have injected a risk premium into the gold market.
News reports late Thursday said the US has approved plans for a series of strikes on Iranian targets in Syria and Iraq. The latest developments follow a recent drone attack on a US base in Jordan near the border with Syria which killed three military personnel. Any developments that risk a wider conflict tend to drive gold higher as investors move capital into safe haven assets.
Looking ahead, the markets will be watching out for Friday’s US Non-Farm Payrolls figures for January as well as the unemployment rate, for the latest signals on the health of the US economy and further clues on the timing of any monetary policy changes.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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