Gold rises over 1% buoyed by dollar slide, weak US private payroll data

By Seher Dareen

(Reuters) - Gold prices rose over 1% on Thursday supported by a dip in the dollar and data showing U.S. private payrolls rose less than expected last month.

Spot gold rose 1.2% to $1,867.60 per ounce by 1518 GMT, having earlier risen to a one-week high. U.S. gold futures also rose 1.2% to $1,870.20.

The dollar index was down 0.5%, slipping off a one-week high touched on Wednesday.

"(The job data) is really raising the recession concerns that have been brewing in the market and supporting gold," said Ryan McKay, commodity strategist at TD Securities

"A portion of the investors and traders are starting to question whether the Federal Reserve will really be willing to be as hawkish as has been anticipated."

ADP National Employment Report data showed private payrolls rose by 128,000 jobs last month versus forecast for an increase of 300,000 jobs.

The weekly unemployment claims report showed the number of Americans filing new claims for unemployment benefits fell yet demand for labour remained strong.

While the Fed is trying to dampen demand for labour as it tries to tame soaring inflation, it needs to do so without pushing the unemployment rate too high.

Investors will now keep a close eye out on Friday's nonfarm payrolls data, which is expected to show strong job growth continued in May.

Fed Vice Chair Lael Brainard on Thursday said she backs at least a couple more half-point interest rate hikes, with more on tap if price pressures fail to cool.

While bullion is considered a safe haven during times of political and economic uncertainty, higher interest rates increase the opportunity cost of holding gold, which bears no interest.

Spot silver rose 2% to $22.24 per ounce, platinum gained 2.2% to $1,018.17 and palladium was up 1.1% to $2,018.57.

 

(Reporting by Seher Dareen and Eileen Soreng in Bengaluru; editing by Diane Craft)