Gold eyes $1,300 on unimpressive U.S. data

NEW YORK (Reuters) - Gold rose to near $1,300 an ounce on Thursday, ending higher for a fourth straight day as uninspiring U.S. jobless claims and weak euro zone data renewed desire to buy bullion as a hedge against economic uncertainty.

A jeweller displays gold ingots at his shop in Peshawar, northwest Pakistan on September 23, 2010. REUTERS/Fayaz Aziz

Silver hit a 2-1/2 year high at $21.23 an ounce, a hair below its highest since 1980, on strong investment buying. The gold-to-silver ratio dropped to its lowest level since January, as the white metal outperformed gold in the last 30 days. (Graphic: )

Gold benefited from lackluster economic data after reports showed new U.S. claims for jobless benefits rose unexpectedly last week, and as Ireland’s economy shrank 1.2 percent in the second quarter.

“We have a much weaker GDP report out of Ireland, and that has put the spotlight back on euro-zone debt concerns. Gold is benefiting as people look for a safe haven in the face of renewed euro zone anxiety,” said Peter Buchanan, senior economist at Toronto-based CIBC World Markets.

Buchanan also cited another euro zone report showing growth rates in the union’s services and manufacturing sectors slowed more than forecast this month as firms hired fewer new workers.

Bullion hit a record high at $1,296.10 an ounce on Wednesday as the dollar tumbled after the Federal Reserve signaled its readiness to pump billions of dollars into the economy through purchases of government debt, a process known as quantitative easing.

Spot gold rose 0.2 percent to $1,292.15 an ounce at 3:10 p.m. EDT (1910 GMT). U.S. gold futures for December delivery settled up $4.20 at $1,296.30.

Gold’s failure to make a new peak after five successive record highs just short of the $1,300 mark prompted some traders to ask whether the rally may be due for a pause. Spot gold is up 3.5 percent this month and 18 percent for the year.

“Once we touch $1,300 it will probably stall there and there will be some profit-taking, but it won’t be extensive,” said Andrey Krychenkov, an analyst at VTB Capital.

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Other analysts said gold has room to rally further to its inflation-adjusted high over $2,200 an ounce. (Graphic: )

Gains were checked by a mild rebound in the U.S. dollar against the euro on worries over Ireland. <FRX/>

While the dollar’s recovery kept a lid on further gains in gold, the possibility of further U.S. monetary easing provided support.


On technical charts, support was evident after spot gold cleared a trendline connecting the highs from December and June, and resistance from a rising channel dated back to late July coincided with the $1,300 mark. (Graphic: )

At the annual gold-mining industry get-together in Denver, Aaron Regent, the head of Barrick Gold, the world’s largest gold producer, said the same investor nervousness that has led to record bullion prices could just as quickly bring about the demise of the gold bulls.

On the other hand, the CEO of Yamana Gold said gold has room to rally further.

“When you have a massive influx of investment, and I don’t think we’ve seen it yet, it is the equivalent of a waterfall coming through a garden hose,” Yamana CEO Peter Marrone told Reuters in an interview.

Among other precious metals, silver eased but remained supported after hitting another 2-1/2 year high overnight in Asia. It stood at $21.09 an ounce against $21.11.

Platinum hit a fourth-month high at $1,645 an ounce. It was trading at $1,640.50 an ounce against $1,627.10, while palladium was at $554 against $538.25.

Prices at 3:26 p.m. EDT (1926 GMT)

Additional reporting by Jan Harvey in London; Editing by David Gregorio