Gold investors had reason to cheer on Thursday when the metal rose slightly after four days of decline. The euro finally rose above the impact of Standard & Poor's slashing Spain’s credit rating to just one notch over junk.
In September, gold rose by 5 percent on the U.S. Fed’s decision to buy bonds and support the sluggish economy until job creation rebounded. Last week, new U.S. claims for unemployment dropped to their lowest in nearly 5 years, an indication that the economy just may be on its way up; the dollar gained a bit against the yen but dropped versus the euro.
Spot gold rose 0.3 percent to hit $1,767 per ounce by 2:10 EDT. Gold priced in euros rose yet again (four times in as many days) to just shy of the record high of 1,386.38 euros per ounce that was touched on October 1.
"(Gold) is going to take its biggest cue, as it has for the most recent past, from what happens in the U.S. in respect to the strength of the economic recovery and what that means for monetary policy," Credit Suisse analyst Tom Kendall said.
"The problem with the weekly initial jobless claims is you can get big effects due to seasonality ... and I suspect that this week's release contains some of those kinds of factors and the fact that gold hasn't reacted suggests that this is the consensus out there."
Thus far, gold has risen 13 percent (about $215) over the year. Of that, $165 in gains occurred within the last two months, based largely off the Fed’s stimulus efforts. As gold didn’t manage to break $1,800 an ounce after that, however, a downward slide emerged.
But with relaxed monetary policies in place all over, continued large purchases of bullion by central banks, and consistent demand in China and India, gold should continue to climb.