*
U.S. jobless claims jump, producer prices rise modestly
*
Dollar gains 0.6% to one-week high
*
Silver down nearly 5%, palladium down 3%
(Adds analyst comment in paragraph 5, updates prices)
By Deep Kaushik Vakil
May 11 (Reuters) - Gold retreated on Thursday as rival
safe-haven dollar advanced and outweighed support for bullion
from lingering economic risks, while traders digested the impact
of weak data on the interest rate outlook.
Spot gold was down 0.8% to $2,013.84 per ounce by
1:40 p.m. EDT (1740 GMT), while U.S. gold futures settled
down 0.8% to $2,020.50.
Gold popped up after data showed a jump in weekly jobless claims and the smallest annual increase in producer prices last month in over two years. However, the metal soon gave up those gains as the dollar rose, making bullion more expensive for overseas buyers. The banking situation with
PacWest has prompted some safe haven demand into the U.S. dollar, said Jim Wyckoff, senior analyst at Kitco Metals.
Investors also took stock of comments from Minneapolis Fed
chief Neel Kashkari that an extended period of high rates would
be necessary if inflation stayed stubbornly high.
While this weighs on sentiment for gold "to a certain
extent, the precious metal remains in its uptrend channel
established in November," said Alexander Zumpfe, a precious
metals dealer at Heraeus.
Gold is traditionally considered a hedge against inflation,
but elevated interest rates dim appeal for zero-yield bullion.
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.
With inflation still sticky amid a slow deterioration in the
U.S. economy, the Fed is less likely to feel the need to hike
rates further, keeping gold in a sideways to higher trend, said
David Meger, director of metals trading at High Ridge Futures.
Silver plunged 4.9% to $24.18 per ounce, platinum shed 2% to $1,091.86 and palladium lost 3.4% to
$1,551.96.
(Reporting by Deep Vakil in Bengaluru; Editing by Krishna
Chandra Eluri and Subhranshu Sahu)
