Gold futures have risen to the highest price in more than nine weeks, taking cues from a retreat in the US dollar after weaker economic data.
The most actively traded gold contract, for February delivery, rose $US23.70, or 1.9 per cent, to settle at $1,262.30 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest since November 19.
Gold climbed early during US trading following a batch of economic reports that could renew demand for the perceived haven of gold. Readings on manufacturing, national business activity and weekly claims for unemployment suggested slowing expansion in the world's largest economy.
The data weighed heavily on the US dollar. The ICE US Dollar Index fell to the lowest level in more than a week. Gold and the dollar tend to move inversely, as some investors use gold as a hedge against a weaker greenback.
Analysts say the health of the US economy is also important to the gold market as investors try to gauge the Federal Reserve's plans for a reduction in bond buying. Anticipation that a stronger economy would spur a rollback in the Fed's stimulus has sapped investor demand for gold in the last year, helping send prices to a 28 per cent loss in 2013.
Traders said gold also received a boost from the news that the chief of India's ruling Congress party had asked the Ministry of Commerce to relax restrictions on gold imports that had limited demand in the world's top consumer of the metal. Sonia Gandhi wrote to the ministry asking officials to look into complaints that the restrictions raised the profile of smugglers in India's gold industry, according to a letter written by her office and reviewed by The Wall Street Journal.
"That helped spur the market higher here," said Stephen Platt, a futures strategist with Archer Financial Services, as investors bet demand there may rise.
India last year introduced a series of measures designed to limit gold imports, part of a plan to narrow the country's yawning trade deficit.
Meanwhile, platinum's recent rally slowed a bit on Thursday as investors gauged the impact of the labour strikes getting under way in top producer South Africa.
Platinum, and palladium, which is produced in the country as a byproduct of platinum mining, had both reached two-month highs on Wednesday as investors anticipated the strike by the Association of Mineworkers and Construction Union. Tens of thousands of platinum workers went on strike on Thursday, mostly stopping operations at top three platinum mining companies Anglo American Platinum, Impala Platinum Holdings and Lonmin.
Platinum for April delivery rose 0.1 per cent to $US1,463.20 a troy ounce on the Nymex, a two-month high. Palladium fell 0.4 per cent to $US745.90 an ounce.
"The market had pretty much rallied constantly since mid-December, as the strikes were more or less expected," said VTB Capital analyst Andrey Kryuchenkov.
"Now it's time to take profits."
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,263.00; previous PM $1,241.00
Feb gold $1,262.30, up $23.70; Range $1,230.80-$1,267.00
Mar silver $20.010, up 17.1 cents; Range $19.645-$20.310
Apr platinum $1,463.20, up 80 cents; Range $1,442.20-$1,470.70
Mar palladium $745.90, down $29.50; Range $742.00-$748.75