Gold jumped more than 1.0 per cent to its highest in a week overnight as weak US data deepened concerns over economic growth and bolstered bets for further interest rate cuts by the Federal Reserve.
Spot gold was up 0.5 per cent at $US1,506.45 per ounce.
Earlier, prices had hit their highest since September 25 at $US1,518.50.
US gold futures settled 0.4 per cent higher at $US1,513.80 an ounce.
US services sector growth hit its slowest pace in three years last month, and job growth in the largest segment of the economy was the weakest in half a decade, a survey of purchasing managers showed.
“We continue to see a string of weak economic data that exacerbate concerns about economic growth. On the back of that, we are seeing safe haven demand return significantly in products like gold,” said David Meger, director of metals trading at High Ridge Futures.
“This also brings prospects of rate cuts at the end of October… and lower interest rates are supportive for gold.”
Data earlier in the week showed manufacturing contracted to the weakest level in a decade and hiring by US private employers slowed further in September.
The weaker-than-expected US economic data weighed on global financial markets, extending a stock slide that has pushed world equity benchmarks back to lows last hit in August.
Adding to the economic uncertainty, the US government on Wednesday said it would slap tariffs on certain products from the European Union.
“Data is showing a slowdown and traders are gravitating into gold and precious metals,” said Michael Matousek, head trader at US Global Investors.
“The tariffs are pretty much what is causing the slowdown in the ISM numbers. More tariffs make people’s anticipation of the economic data weaker, so you might as well start buying what will work in future and that is gold.”
Further helping gold, the US dollar fell to a four-week low against the yen and a one-week trough versus the euro.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, rose to 923.76 tonnes on Wednesday, very close to last week’s 924.94 tonnes, their highest since mid-November 2016.
Platinum rose 0.2 per cent to $US888.59 per ounce while silver gained 0.3 per cent to $US17.60 an ounce.
Palladium slid 2.0 per cent to $US1,653.17 per ounce.
The metal used in vehicle exhausts to reduce harmful emissions is likely to rise still higher after growing demand from car makers and a gaping supply shortfall pushed prices to record levels above $US1,700 an ounce this week, analysts said.