Gold nears $1,664 as U.S. budget stays in focus

LOS ANGELES (MarketWatch) — Gold futures settled slightly higher Thursday on increased uncertainty that leaders in Washington will reach a budget deal before next year. But the metal’s gains were limited following upbeat U.S. jobs data.

Gold for February delivery GCG3 -0.37%  rose $3, or 0.2%, to $1,663.70 an ounce on the Comex division of the New York Mercantile Exchange.

The contract had reached $1,666.10 during the session but pulled back after the U.S. Labor Department said applications for new unemployment benefits fell last week to one of the lowest levels of the year.

Initial jobless claims dropped by 12,000 to a seasonally adjusted 350,000 in the week ended Dec. 22, the Labor Department said. Economists surveyed by MarketWatch had forecast claims of 360,000.

The U.S. dollar bumped higher following the report, putting pressure on gold futures. Prices for dollar-denominated commodities tend to become less attractive to holders of other currencies when the greenback strengthens.

“Overall, a strong read,” wrote Ian Lygen, senior government bond strategist at CRT Capital Group, to clients about the jobless-claims report. However, given volatility and reporting issues for claims at the end of the year, “we’re reluctant to rely too much on the release in skewing our read of the labor market.”
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