By Deep Kaushik Vakil
(Reuters) – Gold eased into a tight range on Thursday as a stronger dollar countered support from weaker-than-expected U.S. economic data, which reinforced bets for a pause in the Federal Reserve’s rate hikes and added to wider economic risks.
Spot gold was mostly unchanged at $2,029.46 per ounce by 9:39 a.m. EDT (1339 GMT), giving up small gains after the jobs data in relatively choppy trading.
U.S. gold futures ticked down 0.1% to $2,034.00.
Keeping gold subdued, the dollar advanced 0.5%, making bullion more expensive for overseas buyers. [USD/] .
The number of new U.S. jobless claims jumped last week to the highest level since late 2021, while U.S. producer prices posted the smallest annual increase in April in more than two years.
The data wiped out expectations the Fed will raise rates again in June and also fuelled bets for rate cuts later on.
With inflation still sticky amid slow deterioration in the U.S. economy, “the Fed’s less likely to feel the need to increase rates further,” keeping gold in a sideways to higher trend, said David Meger, director of metals trading at High Ridge Futures,
Also buoying safe-haven bullion was concerns surrounding the U.S. debt ceiling and weak Chinese data.
On Wednesday, data showed the annual increase in U.S. consumer prices slowed to below 5% in April for the first time in two years, but remained well above the Fed’s 2% target.
While gold jumped after the U.S. inflation report supported the market’s view of a Fed pause, “the fact it fuelled further rate cut bets during the second half, currently around 80 bps, may end up being gold’s biggest short-term challenge,” wrote Ole Hansen, head of commodity strategy at Saxo Bank, in a note.
Spot silver fell over 3% to $24.64 per ounce, platinum shed 0.4% to $1,109.94 and palladium lost 0.5% to $1,598.64.
(Reporting by Deep Vakil in Bengaluru; Editing by Krishna Chandra Eluri)
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