The price of gold hovered on Thursday, enduring losses as troubles continued with the euro zone debt crisis, and achieving gains as the U.S. dollar lost value following underwhelming economic data, published reports state.
One day after achieving a fourth consecutive day of gains, bullion was set to increase amid conjecture about the U.S. Federal Reserve stepping forward to intervene and water down the value of the U.S. dollar to spur economic growth.
But a pivotal day for the global market in general and the euro zone in particular is swiftly approaching as Greece prepares for its second round of national elections. Following failed elections from early May, the Aegean nation is set to take another crack at the process on Sunday.
The world's largest economy, that of the U.S., is believed to be slowing down from its recovery from the Great Recession. Inflation and retail data being weaker than anticipated prompt the belief that the central bank is preparing to act, according to
"Once there's evidence that the policymakers on the monetary side are going to have to release stimulus, especially with inflation coming up, we should see rising interest in gold and silver," commodity strategist Jeremy Friesen with Societe Generale in Hong Kong told Reuters.
At 2:59 p.m. on Thursday, gold futures gained 0.09 percent, a $1.50 lift to $1,620.90 per troy ounce.
climbs for the yellowish metal are attributable to an unexpected increase in applications for unemployment benefits, which further demonstrate an economy that is laboriously chugging along.
Jobless claims grew by 6,000 after analysts predicted decreases of 375,000, which pushed the precious metal to its highest price in one week.
Action by the Federal Reserve reduces the value of the U.S. dollar, which pushes up the price of gold. Thus, discussion or even conjecture about the central bank intervening pushes up bullion.
"The expectations of the Fed doing something grew after the current-account data and the jobless data point toward some slowdown," market strategist Adam Klopfenstein with Archer Financial Services Inc. in Chicago told Bloomberg. "People are looking to position themselves in gold as the uncertainties around are growing."
The speculation about the U.S. Federal Reserve preparing to act comes as the body is set to convene two days of meetings early next week.
A bullish performance on Thursday would mark a fifth-straight uplifting session for bullion, the longest winning streak for gold since the end of October of last year. During the Thursday trade session, the precious metal achieved a price of $1,629 per troy ounce, the highest value in one week.
The Archer Financial market strategist also pointed to authorities across the Atlantic Ocean as another factor pressing on the price of gold.
"People are also expecting some kind of coordinated effort in Europe," Klopfenstein told Bloomberg.
As Greek voters prepare to cast ballots on Sunday, the Aegean country's membership in the 17-nation bloc is weighing in the balance.
The two-time recipient of international aid since June 2010 is in peril of defaulting on financial obligations, which not only would upset markets but also serve as a factor in decision makers' interest in keeping the nation among the euro zone.
The price of gold lost value after a European Central Bank official said the financial institution should block demands that it widen the scope of its charge, according t
o The Wall Street Journal.
Member Jens Weidmann with the governing council said the ECB must help prevent increasing inflation but it also should stick to its task of preserving price stability.
He also is president of the central bank of Germany, host of the largest economy of the euro zone.