SINGAPORE: Gold extended gains on Thursday, rising to its highest level in nearly two months, as the euro firmed on upbeat global manufacturing data and expectations that a Greek debt deal to avoid a messy default was close at hand.
Investors are now eyeing the release of US weekly jobless claims data to gauge the health of the world's largest economy, after higher January factory activity was reported for China, the United States and Germany.
Gold added $4.89 an ounce to $1,748.59 an ounce by 0648 GMT, having earlier risen to a high of $1,751.30 an ounce, its strongest since Dec. 8. Gold remains below a lifetime high around $1,920 an ounce hit last September.
"Our near-term upside target is $1,780. We think that's going to be taken out within the next six weeks or so," said Nick Trevethan, a senior commodity strategist at ANZ in Singapore.
"But we remain cautious about end of the quarter fund redemptions, particularly equity redemptions which have linkages to gold. Those funds, we believed, caused the sharp downturn in gold at the end of Q3 and Q4."
US April gold rose $2.10 an ounce to $1,751.60 an ounce.
Newcrest Mining, the world's No.3 gold producer, expects gold to trade as high as $2,500 an ounce and retain its safe harbour status for as long as the world's financial system remains in crisis mode.
The euro inched higher versus the dollar and the Australian dollar hit a five-month high on Thursday as risk sentiment improved after global manufacturing data allayed the market's worst fears about global growth.
Greece's prime minister will call the country's political leaders in the next few days to seek backing for more austerity after the International Monetary Fund warned this was key to securing the new bailout Athens needs to avoid a messy default.
"The gold market has been wobbling around the Greek situation ... will they, won't they find the solution? Until then, gold is likely to remain volatile," said Trevethan at ANZ.
The physical market was largely deserted ahead of the US jobless benefits data for the week ended Jan. 28. Economists in a Reuters survey forecast a total of 375,000 new filings compared with 377,000 in the prior week.
"I think people hesitate to commit too much, with the prices around $1,750. China bought a lot of gold in early January, so they just wait and see. But I think any dips in prices will attract some buying," said a dealer in Hong Kong.
"A weaker dollar will benefit gold for the time being. I think short-term upside will be $1,800."
The dollar index, which measures the greenback against a basket of currencies, inched down after dropping to an eight-week low on Wednesday.
China's gold output was 37.59 tonnes in December, the Ministry of Industry and Information Technology said on Thursday, bringing full-year production to a record of 360.95 tonnes.
In the energy market, Brent crude rose toward $112 a barrel on Thursday, extending gains for a third day on persistent worries over supply from Iran, while upbeat global manufacturing data also boosted appetite for riskier assets.
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