By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures traded higher on Thursday as bargain hunters swooped in after the metal closed at its lowest in a week in the previous session.
The metal turned higher after rumors of a possible French downgrade roiled European markets, reviving fears of an euro-zone debacle, and after U.S. weekly jobless claims were higher than anticipated.
Gold for June delivery GCM2 +0.48% added $7.90, or 0.5%, to $1,647.20 an ounce on the Comex division of the New York Mercantile Exchange. It rose as high as $1,654.90.
The metal pared gains after a report showed manufacturing activity in the Philadelphia area grew at a slower pace in April. Read more on Philly Fed.
Gold ended 0.7% lower on Wednesday as investors grew concerned about lack of physical demand for gold, and as the metal tracked the broader market lower.
The rumors about the French ratings cut were unspecified but widespread in Europe, even though as strategists came forward to dismiss it.
A downgrade in the near future would be unlikely as the French will go to the polls Sunday, the first round of presidential elections, likely to be followed by a runoff on May 6. Read more on French election.
Support also came from data showing requests for unemployment benefits in the U.S. at a near four-month high, giving investors fresh reason to worry about the U.S. economy. Read more on weekly jobless claims.
Despite Thursday’s safe-haven flows, gold has not recently lived up to its reputation of a prime safe-haven asset and prices may dip below $1,600 for brief periods, analysts at Commerzbank said in a note to clients.
“That said, such a price slump should lure in bargain hunters,” especially as the important Hindu festival will be celebrated next week in India, they said.
The broader suite of metals futures was mixed, with silver higher and copper lower. May silver SIK2 +1.26% advanced 31 cents, or 1%, to $15.38 an ounce. Copper for the same month’s delivery HGK2 -0.21% retreated 1 cent, or 0.3%, to $3.62 per pound.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
