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U.S. jobless claims jump, producer prices rise modestly
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Markets mostly see Fed pause in June
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Dollar up 0.5%, silver down 3%
(Recasts, adds quotes, updates prices)
By Deep Kaushik Vakil
May 11 (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. . 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)
