Gold futures for December delivery rose 1.2 per cent to settle at $US1179.80 an ounce at 1.55pm on the Comex in New York, and after the market closed, touched $US1188.40, the highest since June 22. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.73 percent to 700 tonnes on Thursday, their highest since mid-July.
To boost inflation, "It's quite obvious that...additional sets of instruments are necessary", said European Central Bank member Ewald Nowotny - head of Austria's central bank - in a speech Thursday, because the ECB will "clearly miss" its 2.0% target for consumer-price rises despite this year's turn to quantitative easing and zero rates.
Gold extended gains to a fourth straight session on Wednesday, hitting a fresh three-month high, bolstered by a weaker dollar and comments from Federal Reserve officials cautioning against a rate hike this year.
"After the Fed stood down at their last meeting, investors were anxious that they knew something we didn't", he said. The index on Thursday, however, strengthened after data showing weekly jobless claims fell to the lowest level since the early 1970s.
Against a backdrop of disappointing economic data, the ICE US dollar index, a measure of the dollar's strength against a basket of six currencies, has posted declines in four out of the past five weeks. Prices are now closing in on $1,200.00 an ounce.
Fed policy divisions were highlighted on Tuesday as governor Daniel Tarullo argued interest rates should stay on hold while documents showed most regional Fed directors sought higher borrowing costs.
Gold may be overbought in the short term, he said, but "the latest move is very positive for further gains into year-end and beyond". On the upside, gold prices could see a few resistance around the $1,170-an-ounce area, the 200-day moving average.
It's that "broad-based bullishness on gold" that has him concerned.
"Soft USA retail and inflation combined with disinflationary China data undercut the rationale for a rate rise in a few investor's view and helped propel gold", said HSBC analyst James Steel.
Supports are now seen at $1,165-68 levels in the coming sessions.
