Gold made gains despite US new dole claimants falling to the lowest since 2008, suggesting that attempts to boost employment may be working.
The US Federal Reserve has vowed to keep the monetary taps on until employment improves significantly.
That promise has prompted a strong rally in the gold price due to the potential impact on the US dollar, but any indication that the measures may end earlier than expected could have a reverse effect, traders said.
The US Labor Department said new unemployment claim applications fell by 30,000 to 339,000 last week, the fewest for 4 and a half years.
Swiss broker UBS still believes gold is a structural buy and today increased its 2012/13 price forecasts 10-20% to $1700/oz and $1900/oz respectively.
“We believe the market underestimates the Fed’s determination to employ QE to lower unemployment, with QE4 likely in December,” it said today.
Spot gold added US$5.1 to US$1,767.3, but had been higher earlier before the new jobless claims figure came out. Silver was also up US$0.15 to US$34.1.
Gains for the euro against the US dollar had driven the early gains, while the rejection of a pay offer by striking gold workers in South Africa also had an impact.
Mines owned by Gold Fields, AngloGold Ashanti and Harmony Gold, South Africa’s three largest producers, have been affected by industrial action with AngloGold now hinting it may close some mines permanently if it continues. In all, ten gold mines have affected by strike action.
