Gold futures settled higher on Thursday as the dollar dropped and bond yields fell amid improved risk sentiment.
Gold prices were subdued earlier in the day despite the dollar’s weakness and a drop in Treasury yields. However, bullion found support and surged higher as the day progressed.
Risk sentiment improved after the bill to raise debt limit and cap government spending in the U.S. was passed by a wide margin late Wednesday.
The U.S. Senate will vote on the bill later this week before President Joe Biden can sign it into law.
The dollar index dropped to 103.53, losing about 0.75%.
Gold found support as comments from Philadelphia Federal Reserve President Patrick Harker and Fed Governor and vice chair nominee Philip Jefferson signaled willingness to skip raising rates next month to assess incoming data.
Gold futures for August ended higher by $13.40 or about 0.7% at $1,995.50 an ounce.
Silver futures for July ended up $0.400 at $23.987 an ounce, while Copper futures for July settled at $3.7110 per pound, gaining $0.0740.
“Gold prices are enjoying some soft US data that is bringing down those Fed rate hike odds. Factory activity fell for a seventh month, prices paid are in freefall, and the weakening growth prospects should take care of the labor market,” says Edward Moya, Senior Market Analyst at OANDA. Moya says that if U.S. jobs data fail to impress gold prices may move past the $2,000 an ounce level.
On the U.S. economic front, a report from payroll processor ADP showed private sector employment shot up by 278,000 jobs in May after surging by a revised 291,000 jobs in April.
Economists had expected private sector employment to increase by 170,000 jobs compared to the spike of 296,000 jobs originally reported for the previous month.
Meanwhile, the Labor Department released a report showing a slight increase in first-time claims for U.S. unemployment benefits in the week ended May 27th. The report said initial jobless claims crept up to 232,000, an increase of 2,000 from the previous week’s revised level of 230,000.
Economists had expected jobless claims to rise to 235,000 from the 229,000 originally reported for the previous week.
The Institute for Supply Management’s report showed U.S. manufacturing activity contracted at a slightly faster rate in the month of May.
The ISM said its manufacturing PMI slipped to 46.9 in May from 47.1 in April, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 47.0.
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