(Reuters) - Gold rose for a third day on Thursday as weak employment figures and a pledge by the Federal Reserve the previous day to keep interest rates near zero weighed on the dollar and teased out some investor demand.
Data showed first-time claims for unemployment benefits in the United States were broadly unchanged last week, while a longer-term gauge rose to its highest level since January, undermining the dollar..
Gold usually trades inversely to the dollar as weakness in the U.S. currency makes it cheaper for non-U.S. investors to buy the metal.
Spot gold was up 0.4 percent at $1,649.84 an ounce at 1355 GMT, while U.S. gold futures for June delivery were up 0.5 percent at $1,651.00.
“There is little reason to sell gold at the moment,” Andrey Kryuchenkov, an analyst at VTB Capital, said. “Risk aversion is not where it should be for gold to rally much, but at the same time sentiment is cautious at best.”
He said support for gold would remain in the longer term in the form of central bank purchases and inflows into exchange-traded products, where investors tend to display less sensitivity to sharper declines in the gold price.
The U.S. unemployment data provided the latest sign of a weaker pace of healing in the still struggling labor market.
The figures helped gold extend the day’s gains, but the main impetus came from the Fed’s statement on Wednesday following a two-day policy meeting, in which it repeated its commitment to leave U.S. rates unchanged until at least 2014.
An environment of low rates is theoretically beneficial to gold in that it enables the metal to compete more effectively for investor cash. Low rates undermine the returns from assets such as stocks and bonds, which bear dividends and yields, and reduce the premium that investors forfeit by owning gold.
“The message out of the Fed didn’t really change much. We had a little sell-off immediately after the statement came out, but it quickly recovered,” Credit Suisse analyst Tom Kendall said.
“I think it would have taken a much greater change in stance coming out of the Fed for gold to really make a big break one way or the other, and given the disappointing U.S. data coming out over the last couple of weeks, I don’t think that was particularly likely.”
U.S. stocks opened flat on Thursday after the weekly jobless data, while in Europe equities held near three-month lows after glum euro zone data re-focused investors’ attention on the region’s problems, which gave safe-haven Bund futures a boost. .EU .N <GVD/EUR>
Gold could feel the pinch of a lack of consumer buying, particularly in India, where a rise in domestic prices deterred local jewelers and other consumers from purchasing.
Indian gold traders stayed on the sidelines as prices hovered near their highest level in two months due to firm overseas markets and a weaker rupee.
Akshaya Tritiya sales are estimated to have fallen by a half to 10 metric tonnes (11.02 tons) this year as interest was hurt by high prices and weakness in the rupee.
Among other precious metals, silver was up 0.1 percent at $30.72 an ounce. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, rose to a three-month high at 53.6 on Wednesday.
The metal fell in gold’s wake to its lowest since mid-January on Wednesday and looks vulnerable to further losses, according to technical analysts, who study past price movements for clues as to the future direction of trade.
Spot platinum was up 0.3 percent at $1,550.25 an ounce, while spot palladium was up 0.1 percent at $658.47 an ounce.
Editing by Jane Baird