Investing.com -- Gold futures surged to a fresh 12-month high, as investors reacted to a wave of downbeat U.S. economic data ahead of a crucial U.S. jobs report for the month of February.
On the Comex division of the New York Mercantile Exchange, gold for April delivery traded in a broad range between $1,238.20 and $1,260.90 an ounce before settling at $1,257.80, up 16.00 or 1.30% on the session. Gold briefly eclipsed 1-year highs from mid-February when it jumped more than $50 an ounce in a single session to peak at $1,260.80 an ounce. Although the gold trade has been extreme choppy ever since, the precious metal has closed up by more than 1% in four of the last eight trading days. After surging by more than 11% over the last month and 17% since the start of 2016, gold is on pace for one of its strongest first quarters in 30 years.
Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,284.70, the high from Feb. 3, 2015.
The rise in gold on Thursday coincided with sharp declines in the dollar after Markit said its Purchasing Managers' Index for the U.S. services sector fell 0.5 to 49.7, the lowest reading since the shutdown of the federal government in 2013. The final reading for the month inched down by 0.1 from February's flash index of 49.8. Separately, the U.S. Commerce Department said factory orders for January increased by the most in seven months, rebounding from a dismal performance a month earlier. It came as durable goods orders surged 4.7%, offsetting energy driven declines in non-durables. The overall reading still fell short of analysts' expectations for 2.0% gains. Meanwhile, the Institute for Supply Management reported that its Non-Manufacturing Index for February decreased by 0.1 to 53.4, slightly above forecasts of 53.2.
When the Labor Department releases its February jobs report on Friday, the Bureau of Labor Statistics is expected to report that nonfarm payrolls rose by 190,000 last month, following an increase of 151,000 a month earlier. The unemployment rate is expected to remain unchanged at 4.9%, a month after tumbling to its lowest level in eight years. The Labor Force Participation Rate also ticked up 0.1 to 62.7%, as the struggling manufacturing industry added 29,000 positions, its best one-month performance since November, 2014. Analysts will also a keep close eye on monthly wage gains after hourly workers saw their earnings surge by 0.5% in January, amid a wave of minimum wage hikes at numerous states throughout the country. Last month, hourly wages were expected to rise by 0.2%, according to consensus forecasts.
In advance of the release, the Labor Department said Thursday that new jobless claims rose slightly by 6,000 last week to 278,000. Analysts expected a decline of 2,000 to 270,000 following an increase of 10,000 a week earlier. The four-week average fell mildly to 270,250 from 272,000 for the week ending on February 20.
Federal Reserve chair Janet Yellen has constantly reiterated that the Fed will employ a data driven approach as it weighs the timing of its next interest rate hike. A robust jobs report could convince the Federal Open Market Committee to adjust its long-term economic projections when it meets next on March 15-16. On Thursday, Boston Fed president Rob Kaplan noted in a speech in Austin, Texas, that the Fed needs to remain patient when deciding whether to remove accommodative policies. Any rate hikes by the FOMC are viewed as bearish for gold which struggles to compete against high-yield bearing assets.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, plummeted more than 0.65% to an intraday low of 97.46 in U.S. afternoon trading.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for March delivery added 0.177 or 1.21% to close at 15.180 an ounce.
Copper for March delivery lost 0.027 or 1.24% to 2.208 a pound.