Gold climbs over 1% after US data cements Fed pause bets

By Anushree Ashish Mukherjee

(Reuters) – Gold prices rose more than 1% on Thursday as the dollar and Treasury yields dipped after U.S. weekly jobless claims increased more than expected, cementing expectations that the Federal Reserve will pause its interest rate hiking cycle.

Spot gold rose 1.2% to a 10-day high at $1,983.29 per ounce by 2:50 p.m. ET (1950 GMT), on track for its biggest daily rise in nearly a month. U.S. gold futures settled up 1.2% at $1,987.30.

The number of Americans filing new claims for unemployment benefits increased more than expected last week, which could help the Fed’s fight against inflation.

The data confirms that the U.S. economy is slowing down a little bit, giving gold and silver bulls confidence that the Fed is not going to raise interest rates again, said Jim Wyckoff, senior analyst at Kitco Metals.

Data on Wednesday showed U.S. producer prices fell the most in three-and-a-half years in October, while separate data on Tuesday highlighted that U.S. consumer prices were unchanged in October.

Traders saw roughly 2-in-3 odds that rate cuts will not come before May 2024, according to the CME FedWatch tool.

While gold is considered an inflation hedge, rising interest rates dull non-yielding bullion’s appeal.

Boosting gold’s allure, the dollar index held near a more than two-month low hit in the previous session, while benchmark 10-year U.S. Treasury yields also slipped. [USD/] [US/]

“The charts have turned more friendly for gold. If there is a geopolitical development, it could help gold but if we get strong U.S. data, then it would raise the notion of one more (rate) hike and pressure the metals market,” Wyckoff added.

Bullion rose over 7% in October, helped by safe-haven demand as the Middle East conflict unfolded.

Spot silver rose 1.7% to $23.83 per ounce on Thursday, hitting its highest since Sept. 4.

Platinum was down 0.1% to $895.35 and palladium gained 0.4% to $1,035.92.

(Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru; Editing by Jonathan Oatis, Susan Fenton and Shounak Dasgupta)