Gold jumps 1% as U.S. dollar, yields dip after jobless claims data

Bars of gold are seen at the Krastsvetmet company, one of the world's largest producers of precious metals in Moscow, Russia on January 31, 2023. 
Alexander Manzyuk | Anadolu Agency | Getty Images

Gold prices climbed 1% on Thursday after data showed U.S. weekly jobless claims surged last week, cementing expectations that the Federal Reserve will pause its interest rate hiking cycle.

Spot gold rose 1.3% to $1,965.1 per ounce. U.S. gold futures gained 1.1% to $1,980.3.

The number of Americans filing new claims for unemployment benefits surged last week, suggesting that the labor market was slowing amid mounting risks of a recession.

"This data shows a further weakness in the US economy, which is good news for gold as it will allow the Fed to be on hold," said Edward Moya, senior market analyst at OANDA.

"If we get further softness in inflation, if the Fed holds and they really don't signal a strong likelihood of a hike for the next meeting, then there is a good case for gold to edge higher."

Following the jobs data, the dollar slipped to a near one-week low against its rivals, making gold less expensive for other currency holders, while benchmark U.S. 10-year Treasury yields tumbled.

Money market participants now see a nearly 74% chance that the U.S. central bank will skip raising interest rates at its policy meeting next week, up from nearly 66% earlier, according to the CME's Fedwatch tool.

Lower U.S. interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.

The U.S. consumer inflation report for May, due on June 13, could provide more clarity about the health of the world's largest economy.

"There's a lot of uncertainty and you could see it in gold prices, if yields really start to back off here, then gold could move much higher," said Daniel Pavilonis, senior market strategist, RJO Futures.

Elsewhere, silver jumped 3.4% to $24.24 per ounce, while platinum fell 0.7% to $1,010.93.

Palladium dipped 2.1% to $1,359.34, after falling to its lowest since June 2019 at $1,348.74 earlier in the session.