Gold for December delivery was last up $8.50 at $644 an ounce. The benchmark contract closed lower Wednesday as traders weighed mixed economic data on the health of the U.S. economy and as the dollar won back some ground against the euro.
That trend reversed on Thursday with the dollar falling against all its major rivals, especially sterling, on continued concerns the U.S. economy will grow at a rate more slowly than other countries.
There was further support in data showing core inflation rose slightly faster than expected, at 0.2%, in October. This kept the year-over-year gain in the core personal consumption expenditure price index at 2.4%, well above the Federal Reserve's implied cap of 2%.
Economists had been expecting core prices to rise just 0.1%, according to a survey conducted by MarketWatch.
Meanwhile, oil prices extended their gains above $62 a barrel in a continued response to supply data that were viewed as bullish as well as to forecasts for cold weather across the U.S. in the coming days.
"The threat of oil-driven inflation and bearish sentiment toward the dollar will continue to draw investors towards gold and its unique properties as a store of value," said James Moore, analyst at TheBullionDesk in London. "While gold is meeting stiff resistance around $640, dips continue to find good support and given the movements in oil and the dollar, will eventually push gold on to $650," he said.
Other metals joined in gold's rally. Silver futures moved up 25.4 cents at $13.82 an ounce, platinum rose $24.10 an ounce and palladium added $3.70 to $326 an ounce. Copper rose 2.40 cents to $3,152 a pound.
