Gold rises as weak US jobs data, lower oil prices support demand

Gold prices extended gains on Thursday after touching a more than one-week high in the previous session, as softer-than-expected US private jobs data and lower oil prices supported demand for bullion.

Spot gold rose 0.8% to $4,063.56 per ounce as of 0103 GMT. The metal had climbed to $4,114.99 per ounce on Wednesday, its highest level since June 23.

US gold futures for August delivery edged 0.2% lower to $4,075.60.

The latest ADP national employment report showed US private employment increased by 98,000 jobs last month, below economists’ forecast of 118,000. The May reading was unrevised at 122,000.

Investors are now awaiting June nonfarm payrolls data, due later on Thursday, for further signals on the Federal Reserve’s monetary policy outlook and the near-term direction of gold prices.

Oil prices also declined after Iran and the United States concluded a round of indirect talks on Wednesday focused on the Strait of Hormuz, although there was little indication of progress towards a lasting peace.

Elevated oil prices and a stronger labour market can add to inflation concerns and support expectations of higher-for-longer interest rates. While gold is considered a hedge against inflation, higher interest rates can reduce its appeal because the metal does not offer yield.

Federal Reserve Chairman Kevin Warsh said on Wednesday that he would remain firmly committed to the US central bank’s 2% inflation target, but offered limited guidance on the future path of monetary policy or the economy.

Traders are pricing in around a 64% chance of a rate hike in September, according to the CME FedWatch Tool, indicating stronger expectations of tighter monetary policy.

Among other precious metals, spot silver rose 1% to $59.76 per ounce, platinum gained 0.4% to $1,583.05, and palladium added 1.1% to $1,223.80.