Gold climbed Thursday, tacking on roughly 4% for the month to finish at an 11-month high, a day ahead of monthly data on U.S. employment that are expected to offer clues to the Federal Reserve’s next move on monetary policy. Gold prices have settled above the key $1,300-an-ounce level in each of the past three sessions, finding support from short covering, an increase in long positions and a generally positive price outlook for the metal, said Chintan Karnani, chief market analyst at Insignia Consultants.
“For the first time in many years, traders and investors are asking me whether they can invest in gold,” Karnani said. “I have not seen such positive outlook to gold in the past two years.”
Short covering refers to traders who sold futures contracts in a bet that prices would fall buying them back to close out positions.
December gold GCZ7, +0.10% added $8.10, or 0.6%, to settle at $1,322.20 an ounce, for its highest settlement since Sept. 29, according to FactSet data. For the month, the most-active contract climbed about 4%—the largest monthly gains since January, according to FactSet data.
Karnani said cautious trading is key as a failure to breach the $1,340 mark for prices could prompt a move lower.
Sharp gains in the U.S. dollar Friday, if any in the wake of the monthly U.S. nonfarm payrolls report, “could result in sharp corrections” for gold, he added.
Financial markets have mixed feelings about the odds of another Fed rate increase—likely not until the December meeting, if at all. That’s because inflation has remained stubbornly low even as other aspects of the economy, including hiring, perk up. Higher interest rates tend to lower gold’s appeal in favor of other assets since the bullion doesn’t bear a yield.
Economic data Thursday were mostly upbeat, with weekly jobless claims holding close to a postrecession low, hinting at a solid monthly jobs report. Consumer spending rose 0.3% in July, while a gauge of Chicago-area economic activity held steady in August.
The dollar turned lower in late-morning trade Thursday, adding to gold’s momentum. The greenback’s closely followed index has been under pressure since the start of the week, touching its lowest level since January 2015. On Thursday, the ICE Dollar index DXY, +0.17% a gauge of the buck against a half-dozen currencies, fell 0.2%.
A popular exchange-traded fund, the SPDR Gold Shares ETF GLD, +1.17% traded up 0.8%, while the VanEck Vectors Gold Miners ETF GDX, +2.32% rose 1.8%.
Gold’s advance earlier this week came after North Korea fired a ballistic missile over Japan’s airspace, in what Japanese Prime Minister Shinzo Abe called an “unprecedented, grave and serious threat that seriously damages peace and security in the region.”
In other metals trade, December silver SIZ7, +0.09% rose 7.2 cents, or 0.4%, to $17.575 an ounce, while December copper HGZ7, +0.13% added 1.2 cents, or 0.4%, to $3.099 a pound. October platinum PLV7, -0.02% ended at $998.50.10 an ounce, up $3.30, or 0.3% and December palladium PAZ7, -0.19% tacked on $1.20, or 0.1%, to $932.25 an ounce.