Gold rallies ahead of U.S. jobless data

Gold rose for a second day on Thursday ahead of U.S. unemployment data which is expected to show an increase in the number of people who filed for initial unemployment payments in the week ending August 3. Gains however remained limited amid comments from Fed presidents who recently said that the central bank may taper its monetary easing program in the upcoming months.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1 289.10 per troy ounce at 8:06 GMT, up 0.30% on the day. Prices held in range between days high at $1 296.50 and low of $1 282.20 per troy ounce. The precious metal surged 0.22% on Wednesday, trimming its weekly decline to 1.6% after settling 1.66% lower the previous week.

Gold erased some of its earlier weekly losses as the U.S. Department of Labor is expected to report later on Thursday that the number of people who filed for initial unemployment payments last week increased compared to the preceding period. According to analysts projections, Initial Jobless Claims have risen to 335 000 in the week ending August 3, above the previous weeks 326 000, fueling speculation Fed might delay tapering its bond purchasing program.

Jonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney, said for Bloomberg: “Today’s jobless claims are tipped to be weaker than expected. The market’s reading the fact that stimulus will be with us for a little bit longer.”

The dollar index, which measures the greenbacks performance against six major peers, fell to 81.26 by 8:07 GMT, down 0.04% on the day. The September contract fell to 81.13 earlier in the day, the lowest since June 18, while days high stood at 81.40. The U.S. currency gauge slipped 0.45% on Wednesday, a fourth consecutive daily decline, and extended current weeks fall to 0.9% after advancing 0.3% the preceding five-day period. The dollar tends to trade inversely to dollar-denominated commodities. Weakening of the greenback makes such raw materials cheaper for foreign currency holders and boosts their appeal as an alternative investment.

However, gains remained limited as several Fed representatives commented recently it is highly possible for the monetary stimulus deceleration to take place in the upcoming months. Fed Bank of Chicago President Charles Evans, who was one of Quantitative Easing’s supporters, said on Tuesday that there has been a “good improvement” in the labor market and indicated the central bank’s monetary easing program might be decelerated in September. FOMC’s next meeting is scheduled for September 17-18 when policy makers will review their assessment on the economic recovery pace.

Earlier in the week, Federal Reserve Bank of Dallas President Richard Fisher, one of Quantitative Easing’s critics, commented that the central bank is getting closer to tapering the monetary easing program. He said in a speech in Portland, Oregon: “Financial markets may have become too accustomed to what some have depicted as a Fed ‘put. Some have come to expect the Fed to keep the markets levitating indefinitely. This distorts the pricing of financial assets” and can lead to “serious misallocation of capital.”

Atlanta Fed president Dennis Lockhart made similar comments and Cleveland Fed President Sandra Pianalto said on Wednesday the central bank will consider reducing bond purchases if the labor market continues to improve. According to a Bloomberg survey of analysts last month, fifty percent of the 54 economists expect Fed to taper its Quantitative Easing program in September.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, dropped to a new low of 910.53 tons yesterday, the lowest since February 2009. Market players are awaiting the Initial Jobless Claims statistics at 12:30 GMT today.

Elsewhere on the precious metals market, silver, platinum and palladium tracked golds upward momentum. Silver for September delivery rose to $19.650 an ounce at 8:02 GMT, up 0.78% on the day. Prices ranged between days high and low of $19.848 and $19.485 per ounce respectively. Platinum October futures stood at $1 447.50 an ounce, marking a 0.64% daily advance. Futures held in range between $1 454.65 and $1 435.65. Meanwhile, palladium with delivery in September climbed to $727.00 an ounce, up 0.53% on the day. Prices varied between days high and low of $731.70 and $723.00 per ounce respectively.