By Laura Mandaro, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures bounced higher Thursday, taking another stab at $1,900 an ounce after the European Central Bank cut growth forecasts and U.S. jobless claims edged higher.
Gold for December delivery GC1Z +2.18% gained $37.60, or 2.1%, to $1,855.20 an ounce on the Comex division of the New York Mercantile Exchange, extending advancing in Asian and European trading hours after a rush of ECB remarks and U.S. data.
In a news conference following the ECB’s decision to keep rates on hold at 1.5%, ECB President Jean-Claude Trichet said bank officials had cut forecasts for euro-area economic growth, feeding speculation the central bank may be finished hiking interest rates for the year. Read more on Trichet's remarks.
The U.S. Labor Department said applications for unemployment benefits rose to 414,000 last week from 412,000, slightly over expectations of a rise to 411,000. The four-week average of claims also gained, to the highest level since mid-July. Read more on jobless claims.
Weak economic data and the prospects for more fiscal stimulus have driven gold to record highs this year, as investors seek a hedge against falling equities and as some fear potential for inflation and currency devaluation, particularly the U.S. dollar debasement.
Federal Reserve Chairman Ben Bernanke will deliver a speech later this afternoon that will be closely parsed out for signals the bank is ready to take further monetary easing options.
After the market close, President Barack Obama is set to deliver a speech on the labor market, during which he could unveil plans for a $300 billion jobs package.
“Besides the persistent debt problems in euro-zone countries and the threat of the U.S. economy sliding into recession, interest rates are set to remain at a very low level for an extended period,” analysts at Commerzbank said in a research note.
“In our opinion, the price of gold should therefore remain well supported and it is only a matter of time before new record highs are reached,” they wrote.
U.S. stocks started modestly lower, giving back a portion of the prior session’s more-than 2% gains.
The Dow Jones Industrial Average DJIA -0.18% was off 24 points at 11,390. The dollar rose against the euro EURUSD -0.77% after the Trichet remarks, with the European unit buying less than $1.40.
