By Frank Tang and Jan Harvey
NEW YORK/LONDON (Reuters) - Gold rose 1 percent on Thursday, breaking above $1,350 an ounce for the first time in more than a month, on rekindled buying prompted by expectations the Federal Reserve will continue its monetary stimulus due to disappointing U.S. jobless claims data.
Bullion prices rallied after the number of Americans filing new claims for unemployment benefits fell less than expected last week.
Technical buying also lifted gold after it breached key resistance at its 50-day moving average. Also, analysts cited a two-month high in the open interest for U.S. gold futures, a liquidity gauge, for bullion's gains.
"With open interest in gold growing, it indicates new business is not just because of short covering, and that gold buyers may keep a steady course," said George Gero, vice president of RBC Capital Markets.
Spot gold rose 1 percent to $1,345.70 an ounce by 3:43 p.m. EDT (1943 GMT), having earlier hit $1,351.61, its highest since September 20.
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U.S. gold futures for December delivery settled up $16.30 an ounce at $1,350.30, with trading volume about 20 percent below their 30-day average, preliminary Reuters data shows.
A two-week U.S. government shutdown this month increased expectations that the U.S. central bank will delay reducing the size of its $85 billion monthly bond-buying stimulus until next year, supporting gold prices.
Heavy positioning in the Comex November $1,400 call options could provide upward pressure for bullion prices.
"The $1,400 (call options) have the largest open interest by far, with almost 1.9 million ounces. This could prove a magnet for spot should we continue to rally," TD Securities precious metals trading desk said in a note.
Gold was also underpinned by a weaker U.S. dollar and by U.S. Treasury bond yields hovering near a three-month low after the weekly jobless claims data.
Positive manufacturing data from China, the world's second-largest gold consumer, also helped support gold prices on Thursday, traders said.
In research news, Goldman Sachs said it expects gold prices to fall to $1,144 an ounce in 2014, driven by improving U.S. economic data, rising real rates and the commencement of tapering of U.S. monetary stimulus.
Among other precious metals, silver was up 0.8 percent at $22.67 an ounce, while platinum also rose 1.1 percent to $1,445.75 an ounce and palladium inched down 0.1 percent to $743.47 an ounce.
Platinum group metal investors are now digesting news that a powerful mine worker union in South Africa has been granted permission by a government mediator to call a strike against Impala Platinum , the world's second largest platinum producer.
(Additional reporting by Clara Denina in London, Lewa Pardomuan in Singapore; Editing by James Jukwey, Susan Fenton, Bob Burgdorfer and Andre Grenon)