Gold climbs on hopes of new Fed bond purchases
Gold prices rose Thursday after a mixed batch of U.S. economic news raised hopes for some investors that the Federal Reserve will take additional steps to try to bolster growth.
Applications for unemployment benefits dipped to a seasonally adjusted 388,000 last week, near a three-month high, the Labor Department reported. That was an indication hiring has slowed down since winter.
The National Association of Realtors' index of signed contracts to purchase homes increased 4.1 percent last month to the highest level in nearly two years.
The weaker unemployment report prompted more investors to buy gold, which is considered a relatively stable asset during uncertain economic times.
It was released a day after Federal Reserve Chairman Ben Bernanke said that the Fed will take further action if necessary to improve the economy. One option is additional bond purchases, also called a quantitative easing program.
"The catalyst for any kind of threat of an additional quantitative easing plan out of the Fed is going to be driven by a deterioration in the jobs market because that's where ... the U.S. population feels that the most," R.J. O'Brien commodities broker Phillip Streible said.
Gold prices have been supported for months in part by the Fed's bond-buying programs. The bank bought Treasury bonds and mortgage-backed securities to push down long-term interest rates and stimulate borrowing and spending.
The Fed's programs kept interest rates low and pressured the dollar, which weakened against other currencies. Gold and other commodities are priced in dollars, so a weaker dollar makes them more of a bargain for traders who use other currencies.
Gold for June delivery increased $18.20 to finish at $1,660.50 an ounce.
Other metals also were higher. May silver increased 85.1 cents, or 2.8 percent, to $31.207 an ounce, May copper rose 6.7 cents to $3.767 per pound, July platinum climbed $22.90 to $1,570.20 an ounce and June palladium rose $17.55, or 2.7 percent, to $672.65 per ounce.
In other trading, natural gas fell after the government said supplies rose last week more than analysts had expected. Natural gas declined 3.2 cents to end at $2.036 per 1,000 cubic feet.
Prices for the fuel have hovered near 10-year lows because an energy boom has created a glut of supply and demand was weak during the winter.
Oil prices increased 43 cents to finish at $104.55 per barrel on the New York Stock Exchange.
Heating oil rose 3.33 cents to $3.1944 per gallon and gasoline futures increased 2.76 cents to $3.1833 per gallon.
In July agricultural contracts, wheat rose 9 cents to end at $6.355 per bushel, corn increased 6.5 cents to $6.075 per bushel and soybeans rose 4.25 cents to $14.8025 per bushel.