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Gold Gains on U.S. data, Fed Policy Support

Gold futures gained in early U.S. trading on Thursday, retaining gains after a stronger-than-expected report on durable goods orders and initial U.S. jobless claims.

Gold continues drawing support from the Federal Reserve’s generously loose monetary policy in addition to bargain hunting following Wednesday’s dip to 7-week lows. Prices fell to $1,699.65 per troy ounce, the lowest levels in the market since September 7.

Gold futures for December delivery gained 0.85 percent to trade at $1,715.85 in early trading on the Comex division of the New York Mercantile Exchange. Prices gained as much as 1.1 percent to a session high of $1,718.45 in early trading.

U.S. data showed that durable goods orders surged by a seasonally adjusted 9.9 percent in September compared with projections at just 7.1 percent.

Additionally, the Labor Department released its figures reporting that the number of people filing for unemployment assistance in the U.S. last week dropped to 369,000 from 392,000 in the previous week, compared to expectations at 370,000.

The data arrived following the Federal Reserve announcing a continuation of measures at the end of its policy-setting meeting on Wednesday. In the rate statement, the central bank said the U.S. economy is improving moderately, but also said job growth has been slow and the unemployment rate remains high.

The continuation of previous plans to keep the benchmark short-term interest rate close to zero through mid-2015 is nothing new to markets, but reiterates the Fed’s commitment to accommodative monetary policy.

The interest rate policy of the Federal Reserve is generally regarded as beneficial for precious metals and has been a main driver of the Bull Run in precious metals since its inception in 2008.

The spot price of gold on Tuesday, August 19, 2008, closed at $788.75 per troy ounce. Following the announcement of the bailouts, gold closed at $900.50 per troy ounce on Friday, October 10, 2008. The price dynamics of the bailouts have not changed and have brought gold to current levels just over $1,700 per troy ounce, though the extension of loose monetary policy for such a period of time has not been tested in current markets and their effects are not entirely known yet.

U.S. silver futures for December delivery gained 1.85 percent to trade at $32.19 per troy ounce.

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