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Gold Touches Four-Week High On U.S. Dollar Weakness

Kitco News

Editor's Note: Updating earlier story to include jobless claims, updated prices, analyst comment.

(Kitco News) - Gold futures retained a modest gain early Thursday after hitting their highest level in a month as the U.S. dollar came under pressure.

Volume was described as thin, with many traders away from their work stations in the week between Christmas and New Year’s Day.

Around of 8:40 a.m. EST, Comex February gold was $2.50 higher at $1,293.90 an ounce and peaked at $1,296.10, the contract’s strongest level since Nov. 29, the last day it was over $1,300. March silver was 3.9 cents stronger at $16.795 after hitting a high of $16.875, also its strongest level since Nov. 29.

Live 24 hours gold chart [Kitco Inc.]

From the start of Asia-Pacific trade, gold “has climbed higher as the day progresses as the greenback continues to tank,” said Tim Brown, precious metals trader with MKS (Switzerland) S.A.

The euro has been as high as $1.19467, its strongest level since Nov. 27. A trader reported that the U.S. currency softened in the wake of a dip in Treasury yields. Gold tends to move inversely to the U.S. dollar, bought as an alternative currency when the dollar is weak.

“Teeing off a weaker dollar, gold continues to rally and is now at a one-month high…,” said Edward Meir, commodities consultant with INTL FCStone. “The precious metal is also benefiting from an increasingly constructive chart picture, with a V-shaped formation taking prices to just below yet another potential breakout level.”

Gold retained its gains after a Labor Department report showing that weekly jobless claims remained at 245,000 in the week to Saturday. This was above a consensus forecast of around 239,000.

February gold is trading right around its 100-day moving average at $1,292.20. Chart support for the contract lies in the area around the 200-day moving average of $1,278.70 and the 50-day at $1,278.20.

On the upside, gold should meet “staunch resistance” around the $1,300 level, Brown said. This is both a psychological level, plus is an area where gold stalled in late November, with the February futures ticking just above $1,300 three straight days before sliding.

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