Gold prices settled higher Thursday, tallying a third consecutive session gain, as a drop in the September U.S. ISM services sector index fed worries about the health of the economy, boosting haven demand for the precious metal.
Prices, however, pulled back from the session's best level, as U.S. benchmark stock indexes erased losses that were fed by the downbeat economic data.
Service-oriented companies that employ the vast majority of Americans saw their weakest growth in September in three years. The ISM services survey dropped to 52.6% in September from 56.4%. That fueled safe-haven demand for gold.
"So far this week, the economic numbers have been ringing the recession bells and today's data has made them only louder," said Naeem Aslam, chief market analyst at ThinkMarkets. "The data has plunged to three years low and it shows markets are getting clobbered," providing "more tailwind" to the gold price.
Now, "all hopes are pinned on the [nonfarm payrolls] data" due out Friday, said Aslam.
December gold GCZ19, -0.17% on Comex rose $5.90, or 0.4%, to settle at $1,513.80 an ounce, after rising 1.3% on Wednesday. December silver SIZ19, -0.14% gave up earlier gains, to finish down by less than a penny, or 0.04%, to $17.676 an ounce, after a 2.2% rally in the prior session.
Separate data released Thursday also showed August factory orders down 0.1% and durable goods orders up 0.2%. Weekly jobless claims rose to a one-month high of 219,000, partly reflecting a three-week-old strike at General Motors.
The data come after a weak ISM manufacturing reading on Tuesday, the weakest in a decade.
The U.S. nonfarm-payrolls report Friday will hold new significance given reports of weakness in manufacturing and a weaker-than-expected private-sector report from Automatic Data Processing Inc. on Wednesday.
For the week thus far, gold trades about 0.1% higher, while silver has fallen by 1.3%.
Weaker-than-expected global economic data and developments on the international trade front have supported some buying of assets considered havens, like gold, but overall strength in the U.S. dollar, also drawing some safety bids, has muted some of the advance for precious metals.
The ICE U.S. Dollar Index DXY, -0.02%, a gauge of the greenback against six currency rivals, recently traded around a two-year high at 99.05, though it was last down 0.2% at 98.806. Strength in the dollar can dull appetite for commodities priced in the U.S. unit.
Trade tensions also were giving lift to bullion. On Wednesday, U.S. also announced $7.5 billion in tariffs on import duties from the European Union.
"Gold rebounded to $1,500 on the back of new trade tension. The new US tariffs against the EU generated a sell off on the stock market and bullion found strength as investors were moving once again towards safe haven assets," said Carlo Alberto De Casa, chief analyst at ActivTrade.
"From a technical point of view, the next few days will be crucial for understanding the strength of this rebound and if bullion can hold $1,500," he said.
Among other metals, December copper HGZ19, +0.08% settled at $2.5535 a pound, down 0.7%. January platinum PLF20, -0.10% ended flat at $894.40 an ounce, while December palladium PAZ19, -0.16% fell 2.1% to $1,630.20 an ounce, retreating from a record high settlement a day earlier.