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Meanwhile, the Dow Jones rose after a slower rise in US producer prices in December fueled hopes that inflation may have peaked. Gold’s pullback also occurred despite the weaker dollar, making bullion cheaper for overseas buyers.
The data shows that initial claims for unemployment benefits in the United States rose to 230,000 from expectations of 200,000 claims for the week ended January 8.
Ed Moya, senior market analyst at OANDA brokerage, Recount Reuters that the overall gold market reaction to the jobs data was rather subdued as it did not change the narrative of what the Fed is likely to do in March.
But putting pressure on gold, stocks saw a bit more positive movement with the PPI data well below expectations and an increase in jobless claims supporting the idea that it could eventually force the Fed to curb his “warmongering rhetoric”, Moya added.
Also weighing on gold, US Treasuries yields rose slightly, increasing the opportunity cost of holding non-performing bullion. Investors braced for one interest rate hike in March and at least two more by the end of 2022.
“Gold’s performance is somewhat of a disappointment, given the pretty seismic crash in the US dollar,” said Ross Norman, an independent analyst.
(With files from Reuters)