Gold prices rose to a seven-week high at $1,234.55 an ounce on Thursday after data showed new U.S. claims for unemployment benefits unexpectedly hit a nine-month high last week, pressuring the dollar.
Spot gold was bid at $1,233.30 an ounce at 1336 GMT, against $1,227.55 late in New York on Wednesday. U.S. gold futures for December delivery rose $4.40 to $1,235.80.
As well as bringing currency benefits to gold, which usually rises on a weak dollar, the data also fueled interest in the metal as a haven from economic uncertainty, analysts said.
The latest economic data have disappointed, raising concerns once again about the solidity of the recovery, said Anne-Laure Tremblay, an analyst at BNP Paribas. This uncertainty in turn supports the gold price.
The dollar was down 0.14 percent against a basket of currencies in the wake of the data, which showed initial state jobless benefit claims rose to 500,000 in the latest week, against expected claims of 476,000.
Weakness in the U.S. unit lifts gold's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
On the wider markets, European equities and U.S. stock futures both turned negative after the numbers, which analysts said added to a shaky picture of the U.S. economic recovery. Wall Street stocks later fell at the market open. .N .EU
Concerns over the prospect of sluggish growth have raised investors' appetite for bullion as a haven from uncertainty in the wider markets. This has been reflected in a rise in holdings of the world's largest gold exchange-traded fund.
ETF HOLDINGS RISE
New York's SPDR Gold Trust said its holdings rose just under 1 ton to 1,295.516 tons, their highest since July 27, on Wednesday.
ETF Securities, a London-based provider of exchange-traded products backed by precious metals, meanwhile said in a weekly report on Thursday that inflows into its physically backed gold products had hit a 13-week high.
This greater level of investor interest shows that investors currently prefer more defensive positions again, said Commerzbank in a note.
Confidence in the recovery of the global economy is evidently falling. As long as investor interest remains high, gold prices should remain well supported.
The technical outlook for gold is also looking more positive after the metal's recent gains, analysts said, although strong pockets of resistance remain.
Having broken through daily cloud resistance earlier in the week, a retracement level at $1,242 could be tough to break in the near term, said Barclays Capital in a note.
Nevertheless, consolidation above $1,190 is bullish, and we continue to expect the cited resistance eventually to give way and gold to test $1,350 later in the year.
Among other precious metals, silver was bid at $18.49 an ounce against $18.32, platinum was at $1,534 an ounce versus $1,527 and palladium at $493.50 versus $486.50.
The ratio of platinum to gold -- or how many ounces of gold were needed to buy an ounce of platinum -- fell to a 1-1/2 month low at 1.24 on Thursday, as the yellow metal's rise made it comparatively more expensive.
(Reporting by Jan Harvey; Editing by Jane Baird)