Gold hits near 2-week high as soft US data lifts Fed rate-cut bets
US service sector sags in June as orders sink
US weekly jobless claims rise as labor market slows
Dollar hits two-week low
US nonfarm payrolls report due on Friday
Adds details from Fed minutes in 9th paragraph and updates prices
By Brijesh Patel
July 3 (Reuters) -Gold prices rose more than 1% to a near two-week high on Wednesday, driven by increased bets for a September interest rate cut by the Federal Reserve after recent U.S. data suggested that the labor market was softening.
Spot gold XAU= was up 1.2% at $2,357.06 per ounce by 02:08 a.m. ET (1808 GMT). U.S. gold futures GCcv1 settled 1.5% higher to $2369.40.
"The precious metals complex, as well as base metals, are rallying across the board on ADP and jobless claims data that reinforces the 'softening economy' narrative which will likely lead to the first rate cut in September," said Tai Wong, a New York-based independent metals trader.
"Bulls are trying to get ahead of what many believe will finally be a weak payrolls report on Friday," he added.
First-time applications for U.S. unemployment benefits increased last week, while the number of people on jobless rolls rose further to a 2-1/2 year high towards the end of June, consistent with a gradual cooling in the labor market.
A measure of U.S. services sector activity slumped to a four-year low in June amid a sharp drop in orders, potentially hinting at a loss of momentum in the economy at the end of the second quarter.
Following the U.S. data, the dollar =USD slipped to a two-week low, making gold more attractive for other currency holders, while the yield on the benchmark U.S. 10-year Treasury note US10YT=RR slid. [USD/ US/
The market now sees a 68% chance of the Fed cutting interest rates in September. Lower rates reduce the opportunity cost of holding non-yielding bullion. FEDWATCH
Fed officials at their last meetingacknowledged the U.S. economy appeared to be slowing and that "price pressures were diminishing," according to minutes of the two-day session held on June 11-12.
Investors now look forward to the nonfarm payrolls report due on Friday for more clarity on U.S. rate cuts.
Spot silver XAG= rose 3.4% to $30.51, platinum XPT= gained 0.8% to $999.12 and palladium XPD= eased 0.1% to $1,020.98.
Spot gold price in USD per oz https://reut.rs/3xyrtCV
Reporting by Brijesh Patel in Bengaluru; Editing by Anil D'Silva and Alan Barona
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