Gold climbs to over one-month high on weaker yields after US data

Gold prices rose to a more-than-one-month high on Thursday after the latest US economic data pressured the Treasury yields further, following a soft core inflation reading this week that increased bets for a more dovish Federal Reserve policy.

Spot gold gained 0.8% to USD 2,716.91 per ounce as of 01:40 p.m. ET (1840 GMT), hitting its highest since Dec. 12. Prices hit an all-time high of USD 2,790.15 on Oct. 31, 2024.

US gold futures settled 1.2% higher at USD 2,750.90.

Initial claims for state unemployment benefits rose to a seasonally adjusted 217,000 for the week ended Jan. 11, the Labor Department said on Thursday. A Reuters poll had forecast 210,000 claims.

“The initial jobless claims were more than expected, so that signals some weakening in the labor market,” said Alex Ebkarian, chief operating officer at Allegiance Gold.

“We also saw the US Treasury yields dropping, so we’re seeing the attractiveness of gold re-invigorating.”

The benchmark 10-year Treasury yields trimmed gains and were trading at an over one-week low after retail sales, jobless claims and import prices data.

Gold prices extended gains on Wednesday after data showed core US inflation increased 0.2% in December after rising 0.3% for four straight months, also giving hopes for easing monetary policy.

Markets now expect the Fed to deliver 37 basis points (bps) worth of rate cuts by year-end, compared with about 31 bps before the inflation data.

“Gold should find itself in a supportive environment, so long as market participants can hold on to expectations for Fed rate cuts in 2025,” said Exinity Group chief market analyst Han Tan.

Elsewhere, Israel airstrikes killed at least 77 people in Gaza, hours after a ceasefire deal was announced to bring an end to 15 months of war.

Gold is seen as a hedge against inflation and geopolitical uncertainty, but higher interest rates tarnish non-yielding bullion’s allure.

Spot silver rose 0.5% to USD 30.80 per ounce and platinum added 0.4% to USD 934.20, while palladium fell 2.1% to USD 940.60.

(Reporting by Anjana Anil and Anushree Mukherjee in Bengaluru; Editing by Vijay Kishore, Mohammed Safi Shamsi, and Alan Barona)