Gold hits 7-week high at $1,235 after US data

Gold prices rose to a seven-week high at $1,234.55 an ounce on Thursday after data showed new US claims for....

Written by Reuters | London | Published: August 20, 2010 1:26:54 am

Gold prices rose to a seven-week high at $1,234.55 an ounce on Thursday after data showed new US claims for unemployment benefits unexpectedly hit a nine-month high last week,pressuring the dollar.

Spot gold was bid at $1,233.30 an ounce at 1336 GMT,against $1,227.55 late in New York on Wednesday. US gold futures for December delivery rose $4.40 to $1,235.80.

“As well as bringing currency benefits to gold,which usually rises on a weak dollar,the data also fuelled interest in the metal as a haven from economic uncertainty,” analysts said.

“The latest economic data have disappointed,raising concerns once again about the solidity of the recovery,” said Anne-Laure Tremblay,an analyst at BNP Paribas. This uncertainty in turn supports the gold price.

The dollar was down 0.14% against a basket of currencies in the wake of the data,which showed initial state jobless benefit claims rose to 500,000 in the latest week,against expected claims of 476,000.

Weakness in the US unit lifts gold’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.On the wider markets,European equities and US stock futures both turned negative after the numbers,which analysts said added to a shaky picture of the US economic recovery. Wall Street stocks later fell at the market open.

Concerns over the prospect of sluggish growth have raised investors’ appetite for bullion as a haven from uncertainty in the wider markets. This has been reflected in a rise in holdings of the world’s largest gold exchange-traded fund. New York’s SPDR Gold Trust said its holdings rose just under 1 tonne to 1,295.516 tonnes,their highest since July 27,on Wednesday.

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