Gold Up on Dour Data

Updated from 11:28 a.m. EST

Gold streaked higher again Thursday with traders betting that more gloomy economic data will undermine the greenback.

New data from the Labor Department show that last week's initial claims for unemployment insurance rose 18,000 to 327,000, compared with analysts' forecasts of 310,000.

Data for the prior period were revised upward to 309,000 from 308,000.

Also published by the same agency were data showing that productivity growth came to a standstill in the third quarter compared with consensus forecasts for growth of 1.1%. In addition, the prior period's figures were revised down to 1.2% from 1.6%. Unit labor costs, a key measure of inflation, rose 3.8%, above expectations of a 3.4% increase.

Without sustained growth in productivity, increases in labor costs tend to get passed on to consumers in the form of higher prices for goods and services.

Those reports were accompanied by generally weaker-than-expected October sales data from retailers such as Wal-Mart (WMT Quote) and Target (TGT Quote).

"After two weeks of nearly universally below-consensus economic reports, we have entered a pessimists' paradise," writes Michael Darda, chief economist at MKM Partners in Greenwich, Conn. "In other words, the recession trade is back on."

And that looks like great news for gold, as investors in the yellow metal tend to thrive on strife and turmoil.

Bullion market watchers seem to be anticipating a dollar slide, although reaction in the spot market was mixed, with the dollar buying 117.14 yen, up from 117.04 yen late Wednesday.

The greenback was down against the euro, which was recently trading at $1.278, down from $1.2755 previously.

The varied reaction in the foreign-exchange markets didn't hold the gold bulls back, with December-dated contracts closing up $8.50 at $627.80 an ounce on the Comex division of the Nymex.