Gold jumps two percent as dollar falls from multi-month highs
Gold rose nearly 2 percent on Thursday, bouncing off a three-week low touched in the previous session as the dollar fell sharply from recent highs, making the metal cheaper for holders of other currencies.
"The pretty aggressive drop in the U.S. dollar was a significant catalyst for gold today," said Bart Melek, head of commodity strategies at TD Securities.
"The drop in the U.S. bond yields, dollar and improvement in Chinese yuan were major factors and we continue to have volatility in the equity markets. With all of that we have seen significant short covering in gold."
The dollar index <.dxy>, which measures the U.S. unit against a basket of six major currencies, fell 0.9 percent, dropping from a 16-month high hit in the previous session on continued U.S. economic strength. [USD/]
Federal data on Thursday showed new applications for U.S. unemployment aid fell last week and the number of Americans receiving benefits was the lowest in more than 45 years as labour market conditions tightened further.
The economy`s upbeat outlook was, however, tempered by news that manufacturing activity slowed in October as a measure of new orders dropped to its lowest level in 1-1/2 years.
Investors will focus on Friday`s non-farm payrolls data for further clues on the strength of the U.S. economy.
Markets are also watching the U.S. congressional elections on Tuesday, which will determine whether the Republican or Democratic party controls the U.S. Congress, with some predicting increased market volatility on the outcome.
Gold fell in the three previous sessions and touched its lowest since Oct. 11 on Wednesday at $1,211.52 per ounce.
"Traders stepped in to buy the dip in gold prices on some perceived bargain-hunting and by some short-covering from the futures traders," Kitco Metals senior analyst Jim Wyckoff said in a note.
"Precious metals are seeing buying interest as the U.S. dollar index is posting sharp losses today."
Among other precious metals, platinum
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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