By Deep Kaushik Vakil
(Reuters) – Gold prices firmed above the key $2,000 level again on Thursday as the dollar and Treasury yields pulled back after soft U.S. economic data strengthened the case for a pause in interest rate hikes by the Federal Reserve.
Spot gold climbed 0.7% to $2,006.26 per ounce by 1:40 p.m. EDT (17:40 GMT), after hitting a two-week low of $1969.1 in the previous session. U.S. gold futures settled 0.6% higher at $2,019.10.
Weekly U.S. jobless claims edged up last week, suggesting the labor market was gradually slowing, while another set of data showed fewer existing home sales and much lower-than-forecast factory activity in the mid-Atlantic region.
“We saw a disastrous Philly Fed and jobless claims continuing to head higher, so the economy is weakening, some parts more than others,” said Edward Moya, senior market analyst at OANDA.
The data pushed the dollar index 0.2% lower, while benchmark Treasury yields also fell. [USD/] [US/]
“For gold to make that run back to record highs, you need the June rate hike completely off the table,” Moya added.
Markets are pricing in an 88% chance of a 25-basis-point hike in May, which a Reuters poll found would be the final one, with the Fed holding rates steady for the rest of 2023.
“This week has had some aggressive Fed speak from its speakers and a continuation of that narrative could give the greenback a boost, leaving gold exposed on the downside,” DailyFX analyst Warren Venketas wrote in a note.
New York Fed President John Williams said on Wednesday inflation was still at problematic levels and the Fed would act to lower it.
Traders will scan further remarks by Fed policymakers this week, before their blackout period on April 22 ahead of the central bank’s May 2-3 meeting.
Platinum gained 0.4% to $1,094.55 per ounce, its highest in more than three months. Spot silver rose 0.1% to $25.29 while palladium slipped 1.7% to $1,588.94.
(Reporting by Deep Vakil and Ashitha Shivaprasad in Bengaluru; Editing by Jonathan Oatis Sherry Jacob-Phillips and Vinay Dwivedi)
