Gold Climbs to Monthly High, Thank the Fed

Gold rose to its highest price in nearly a month as investors bet that the Federal Reserve would hold off raising benchmark interest rates, despite some positive economic data released Thursday.

Gold for August delivery, the most actively traded contract on Thursday, rose about 0.8% to settle at $1,272.70 a troy ounce on the Comex division of the New York Mercantile Exchange. The move is gold's fourth day of gains over the past five trading days and its highest settlement level since mid-May.

The haven metal is now up about 20% this year, reflecting big gains in the first quarter amid global economic uncertainty.

Investors have pared expectations for the Fed to raise interest rates at their policy committee next week, especially after the jobs report Friday showed weak hiring from U.S. employers in May. Higher rates are negative for gold, which pays no interest, because it makes other yield-bearing assets such as U.S. Treasurys more attractive in comparison.

Interest-rate futures are pricing in a 4% chance that the Fed raises rates next week, compared with more than 30% in recent weeks, according to the CME Group.

Gold rallied Thursday even though data showed the number of Americans filing new applications for jobless benefits declined last week. Initial claims were 264,000 in the week ended June 4, lower than the 270,000 that economists surveyed by The Wall Street Journal had expected.

James Steel, chief precious-metals analyst at HSBC Securities (USA) Inc., said in a note late Wednesday that last week's poor jobs report and concerns about global economic growth suggested there was further upside for gold. He cautioned, however, that there could be roadblocks ahead and that there could be resistance at the $1,300 level.

"There is always the possibility the Fed surprises the market and raises rates, which could rapidly reverse gains," he wrote.

Write to Mike Cherney at mike.cherney@wsj.com

(END) Dow Jones Newswires

06-09-16 1539ET