GOLD futures rose for a seventh consecutive session today as weakness in other markets enhanced the demand for refuge assets.
The most actively traded gold contract, for December delivery, settled up $US3.40, or 0.3 per cent, at $US1199.30 an ounce on the Comex division of the New York Mercantile Exchange.
An unexpected increase in weekly US claims for jobless benefits hit equities and growth-sensitive commodities, sending investors seeking the perceived safety of US government debt and gold. Precious metals are seen by some investors as a better store of value during economic uncertainty than other assets.
KEY COMMODITY PRICES: oil, base metals, gold, silver, wheat and livestock
Gold futures have advanced since a sell-off on July 27, as physical buyers entered the market at bargain prices. The rally has come in small steps at times. Gold futures have settled with gains of 0.3 per cent or less three days this week.
Analysts said gold's momentum was slowed because prices advanced too high for bargain buyers and new investment demand hasn't materialised to lift the market further. Prices broke above the $US1200 an ounce mark in intraday trading, but couldn't hold those gains.
"People are buying the dips, but they're also selling on the rallies," said Frank Lesh, broker and analyst with Chicago-based FuturePath Trading.
By some measures, gold demand hasn't climbed along with prices this week. The amount of gold held by exchange-traded funds fell for six consecutive days going into the latest session, said Suki Cooper, analyst with Barclays Capital.
Physically backed gold ETFs, which are traded on exchanges like stocks or mutual funds, are tied to the price of gold and backed by bullion stored in vaults.
Despite the current uncertainty surrounding gold's direction, prices will likely reach $US1500 an ounce in 2011, the chief executive of Randgold Resources said.
Mark Bristow said fallout from the economic crisis will drag the global economy into a correction next year, increasing investor demand for safe havens.
Mr Bristow said supply constraints will also support prices.
Gold settled at a record high of $US1258.30 an ounce June 18.
Comex silver rose with gold, settling up US4.3 cents, or 0.2 per cent, at $US18.321 an ounce.
Nymex platinum and palladium both declined, hit as the fallout from the unemployment report struck industrial commodities. October platinum ended down $US13.70, or 0.9 per cent, at $US1572.50 an ounce. September palladium fell $US4.10, or 1.5 per cent, to settle at $US496.05 an ounce.
