NEW YORK (Reuters) - Spot gold prices jumped more than 1 percent on Thursday, with technical buying, a strengthening euro and hopes for a Fed stimulus to the U.S. economy cited as driving a late-morning recovery in bullion, which had declined in early trade.
As the euro strengthened against the dollar, bullion rebounded from an intraday low around $1,650 per oz. Some market participants said disappointing U.S. jobless claims data fed hopes that the U.S. Federal Reserve would launch a third round of quantitative easing, or QE3.
Other traders said the rally was technically driven and took many by surprise. They noted that gold outperformed the euro, which was up 0.5 percent against the dollar.
Spot gold was up 1.07 percent at $1,675.14 per oz at 5:00 p.m. EDT (2100 GMT), headed for its largest weekly gain in six weeks as investors have grown more risk-averse. Confidence in the euro zone economy took a knock this week amid concerns mounting about Spain and Italy.
Gold futures for June on Comex settled up 1.2 percent at $1,680.60, close to an intraday high of $1,681.3.
Bullion, which had risen as high as $1,675.31, was still within its recent trading range. Traders said they expected it to hit resistance around $1,685 per oz.
One trader said the rebound from early losses was technically driven after gold hit an intraday low of $1,650 per oz, rather than due to any economic data.
Technical buy stops over $1,665 per oz could be behind the rise, George Gero, senior vice president of RBC Wealth Management, said.
“People decided they wanted to get back into the market. People who thought we’d have a back-and-forth today were on the wrong side. You can search for news, but you’ll come up empty-handed,” he said.
U.S. data disappointed on Thursday, with weekly jobless claims hitting their highest level since January, raising concerns that the job market was stalling.
Spanish bond yields have jumped to nearly 6 percent, a level viewed as unsustainable. Equities are hovering near three-month lows, while holdings of gold in exchange-traded funds, often seen as a measure of longer-term investment appetite for bullion, held near record highs around 70.3 million ounces.
“It’s good that gold has bounced back up. I don’t expect sustained losses, but neither do I expect sustained gains, because tomorrow you have Chinese GDP data but you also have U.S. inflation and that is going to be closely watched,” VTB Capital analyst Andrey Kryuchenkov said.
Economists polled by Reuters expect inflation data due on Friday to show the core rate of consumer inflation, which excludes food and energy prices, to have risen to 2.2 percent in March.
Chinese growth figures for the first quarter of the year are due on Friday, and economists surveyed by Reuters expect to see a rise of 8.3 percent, compared with an 8.9 percent increase in the previous three months.
Gold in euro terms was down 0.2 percent at 1,261.59 euros an ounce, but appeared headed for a weekly gain of nearly 1 percent.
Spot silver, which has fallen in six of the last seven weeks, was up 2.7 percent at $32.39 an ounce.
The gold/silver ratio, which measures the number of ounces of silver needed to buy one ounce of gold, held around 52.5, having risen from closer to 50 a week ago, denoting the outperformance of gold.
Platinum rose 1.28 percent on the day to $1,597.24 an ounce, while palladium was up 2.13 percent at $643.97 an ounce.
The platinum group metals were unruffled by reports of South African PGM output nearly halving year-on-year in February, largely because of a stoppage at Impala Platinum’s (IMPJ.J) Rustenburg mine through an illegal strike.
Editing by David Gregorio and Dale Hudson