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Gold jumps as U.S. economic data suggests less-hawkish Fed path

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Gold prices shot up over 1% on Friday as Treasury yields and the dollar fell after U.S. economic data cemented expectations of a less-hawkish Fed, setting the metal on track for its third consecutive weekly rise.

Spot gold rose 1.6% to $1,863.18 per ounce by 11:08 a.m. ET (1608 GMT). Prices have gained about 2.1% so far this week, the most since the week of Dec. 2.

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U.S. gold futures were up 1.5% to $1,867.60.

“We did see kind of a Goldilocks number for the jobs report this morning… that is we saw a headline jobs number slightly higher than expectations, but we did see a slowdown in wage growth,” said David Meger, director of metals trading at High Ridge Futures.

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“I don’t really think we saw a lot of information here to change the direction of the Fed, and clearly the market is more focused today on the idea that we are getting closer to the end of those fed rate hikes.”

The nonfarm payrolls rose by 223,000 jobs in December, data from the Labour Department showed.

Additionally, U.S. services industry activity contracted for the first time in nearly three years in December, offering evidence that inflation was abating.

Boosting gold, the dollar index was down 0.7%, while benchmark Treasury yields were close to their lowest in nearly two weeks.

Higher interest rates dim bullion’s appeal as an inflation hedge and raise the opportunity cost of holding the non-yielding asset.

Jim Wyckoff, senior analyst at Kitco Metals said gold could continue to trade sideways to higher in the first quarter, having seen new interest on the long side from hedge funds at the start of the New Year.

Spot silver jumped 2.4% to $23.78 per ounce but is set for a weekly fall, while platinum was up 2.1% to $1,080.51 and rising for the week. Palladium gained 2.9% to $1,795.35. (Reporting by Seher Dareen in Bengaluru; Editing by Nick Macfie and Krishna Chandra Eluri)

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