By Seher Dareen
(Reuters) – Gold prices jumped more than 2% on Friday as the dollar fell after data showing an uptick in the U.S. unemployment rate in October raised optimism that the Federal Reserve would be less aggressive on rate hikes going forward.
U.S. employers hired more workers than expected in October, but a rise in the unemployment rate to 3.7% suggested some loosening in labor market conditions.
“The U.S. jobs report has hit the sweet spot of what the marketplace was wanting to see and that has allowed gold prices to rally,” said Jim Wyckoff, senior analyst at Kitco Metals.
Spot gold rose 2.5% to $1,670.18 per ounce by 10:21 a.m. ET (1421 GMT). Bullion is up 1.7% for the week, the highest weekly percentage gain since early October.
U.S. gold futures rose 2.6% to $1,673.30 per ounce.
Following the data, the dollar index fell 1.2%, making greenback-priced gold more appealing for overseas buyers. [USD/]
On Wednesday, the U.S. central bank raised interest rates by 75 basis points and Fed Chair Jerome Powell said it was “very premature” to think about pausing and that the peak for rates would likely be higher than previously expected.
“However, the trend for gold is still down. The tone of Powell on Wednesday afternoon is going to overshadow economic data for probably the near term,” Wyckoff said.
Gold is considered an inflation hedge, but high interest rates dent the non-yielding asset’s appeal.
Futures prices currently reflect close to even odds of a half-point rate hike versus a 75-basis point increase in December.
“Interest rates are likely to stay elevated, but slowing pace of hikes could see the pace of decline in gold prices moderate,” said Christopher Wong, OCBC FX strategist.
Elsewhere, silver rose 5.1% to $20.45 per ounce, and was headed for a weekly gain of 5.8%.
Platinum gained 3.2% to $947.88, while palladium jumped 5% to $1,890.93.
(Reporting by Seher Dareen and Ashitha Shivaprasad in Bengaluru; Editing by Emelia Sithole-Matarise)
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