TOKYO – Gold prices rose closer to $960 an ounce on Friday as oil extended gains and strengthened bullion's appeal as a hedge against inflation.
While US government data on retail sales and weekly jobs claims were disappointing, better-than-expected earnings by Wal-Mart Stores Inc reinforced hopes for an economic recovery and boosted US stocks on Thursday.
Expectations that the global economy may have exited its worst stage were helping improve sentiment across assets, including stocks and oil prices. Gold tends to get support from a rise in oil prices due to concerns about oil-led inflation.
Oil prices extended gains above $71 a barrel on Friday, rising more than $1, while Japanese and Asian stocks gained.
"Gold is getting support from the rise in oil prices but activity is subdued and trading volume is thin," said Wakako Harada, a senior trader at Mitsubishi Corp in Tokyo.
"The market's focus right now is on where real demand will emerge on expectations for an economic recovery. Firmness in stocks and commodities reflect that funds are flowing in on recovery expectations," she said.
Spot gold had risen 0,4% to $957,85 an ounce as of 0115 GMT, compared with New York's notional close of $953,50 an ounce. Gold prices rose to a two-month high above $970 last week. At current price levels, spot gold was set for a 0,5% weekly gain.
US gold futures for December delivery also rose 0,4%, to $960,2 an ounce, compared with $956,50 an ounce on the COMEX division of the New York Mercantile Exchange. Gold futures hit a one-week high of $963,10 on Thursday when signs of a global economic recovery bolstered the metal's status as a hedge against inflation.
Traders said that while the market remained top-heavy above the recent highs, prices at which physical demand enter the market are up slightly from the previous level around $900.
The euro was steady on Friday after rising against the dollar for the second straight session the previous day when data showed the euro zone's two biggest economies unexpectedly returned to growth in the second quarter of the year.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings stood at 1 065,49 tonnes as of August 13, unchanged from the previous business day.
