By Ambar Warrick
Investing.com–Gold prices edged higher on Friday as a bigger-than-expected rise in weekly unemployment claims pushed up hopes that other upcoming labor market readings could show some signs of cooling.
The dollar fell from recent highs, while Treasury yields retreated after data on Thursday that showed U.S. unemployment claims rose more than expected in the past week.
This also spurred some bets that nonfarm payrolls data due later in the day will show some signs of cooling in February, after topping estimates for 10 consecutive months. Analysts are expecting a sharp drop in payrolls from the prior month.
A cooling labor market gives the Federal Reserve less economic headroom to hike interest rates, which is positive for metal markets. But a separate reading showed this week that private payrolls remained robust in the month through mid-February.
Spot gold rose 0.2% to $1,833.81 an ounce, while gold futures rose 0.2% to $1,837.95 an ounce by 19:32 ET (00:32 GMT). Both instruments rose around 0.9% on Thursday.
But gold was still down about 2% for the week, after Fed Chair Jerome Powell warned that U.S. interest rates are likely to rise beyond market expectations, given recent strength in inflation and the jobs market.
The dollar rallied on his comments, while some short-term Treasury yields hit their highest levels since the 2008 financial crisis.
Powell noted that future rate hikes will be largely determined by incoming economic readings. U.S. inflation data for February is due next week, ahead of the Fed’s policy meeting on March 22.
Markets have begun pricing in a greater possibility of the Fed hiking rates by a larger 50 basis points this month, following hotter-than-expected inflation readings for January. Strength in the labor market has also underpinned U.S. price pressures.
Rising interest rates bode poorly for metal markets, as they support yields and increase the opportunity cost of holding non-yielding assets.
Other precious metals crept higher on Friday, with platinum and silver futures advancing around 0.1% each. But both metals were headed for sharp weekly losses.
Among industrial metals, copper prices rose on Friday, but were also set to lose for the week, as weak Chinese economic data added to concerns over rising interest rates.
Copper futures rose 0.1% to $4.0113 a pound, and were set to lose 1.4% this week.