Gold futures rose in New York as a slide in the dollar boosted the appeal of the precious metal as an alternative asset.
The dollar fell to a three-month low against a basket of six major currencies after a report signaled the U.S. labor market will be slow to recover. Gold generally moves in the opposite direction of the dollar and has gained 25 percent in the past year, touching a record $1,266.50 an ounce on June 21.
"Gold is trading off the dollar," said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. "The dollar's getting whacked pretty good, and that's helping gold."
Gold futures for December delivery rose $4.10, or 0.4 percent, to $1,166.50 an ounce at 11:14 a.m. on the Comex in New York. A close at that price would be the biggest gain for the most-active contract since July 20.
The euro gained as much as 0.9 percent against the dollar, topping $1.31 for the first time in almost three months, on speculation that Europe’s economy may recover faster than the U.S.
Gold also reached records last month in euros, British pounds and Swiss francs amid Europe's sovereign-debt crisis. Today's gains for the metal may be limited because some investors may still be selling gold and buying euros, analysts said.
"Gold and the euro are not moving in sync yet," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
Confidence gains
Reports showed European confidence in the economic outlook rose this month to the highest level in more than two years and German unemployment decreased.
"We don’t have that currency fear out there,"said Lesh at FuturePath. "We just don't have that push that will propel gold much higher at the moment."
The outlook for gold remains "positive," even as investors are less concerned that European governments will struggle to reduce debt, Jamie Sokalsky, the chief financial officer of Barrick Gold Corp., said today on a conference call with investors.
"Sovereign-debt issues around the world aren't likely to go away in the foreseeable future," Sokalsky said, adding that "the main drivers of investment demand, and hence, higher gold prices, are still in place."