Gold climbs over 1% as US jobless claims data cement Fed pause bets

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 1.1% to $1,981.39 per ounce by 10:11 a.m. ET (1511 GMT). U.S. gold futures up over 1% to $1,984.60.

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 3-1/2 years in October, while another set of data on Tuesday highlighted that U.S. consumer prices were unchanged in October.

The market is pricing in around a 100% chance that the U.S. central bank will leave rates unchanged in December, 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 fell 0.3%, hovering around to 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 2.3% to $23.98 per ounce, hitting its highest since Sept. 4.

Platinum was up 0.2% to $898.04 and palladium gained 0.8% to $1,040.21.

 

(Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru; editing by Jonathan Oatis)