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PRECIOUS-Gold extends gains to near 3-month peak post weak U.S. data

05/10/2021 11:00
PRECIOUS-Gold extends gains to near 3-month peak post weak U.S. data

Dollar hovers close to over 2-month low

UBS raises palladium price forecasts

Recasts, adds comment, updates prices

By Eileen Soreng

- Gold prices hit a three-month high on Monday after last week's miss on the U.S. jobs growth numbers kept the dollar under pressure and bolstered expectations that interest rates will remain low for some time.

Spot gold XAU= rose 0.5% to $1,840.11 per ounce by 10:49 a.m. EDT (1449 GMT), after touching its highest since Feb. 11 at $1,845.06. U.S. gold futures GCv1 gained 0.5% to $1,839.90.

"The disappointing U.S. job number ultimately catalyzed around algorithmic short-covering," said TD Securities commodity strategist Daniel Ghali.

Also supporting the precious metal was the return of discretionary capital flowing into gold alongside strong physical demand from China and India prior to the recent lockdowns, Ghali added. GOL/AS

U.S. nonfarm payrolls data on Friday showed jobs growth unexpectedly slowed in April, pushing the dollar to an over two-month trough, making gold less expensive for holders of other currencies. USD/ nL1N2MT2XD

The lower-than-expected job numbers came as a speed bump on investors' hopes of a roaring recovery in the world's largest economy and tamped down bets on the U.S. Federal Reserve tightening policy earlier than expected.

The U.S. central bank has pledged to keep interest rates low until inflation and employment pick up. Lower interest rates reduce the opportunity cost of holding non-yielding bullion. nL1N2MW0BB

"What is missing from the recent rise in prices and would be required to revive the rally is the participation of safe-haven seekers," Julius Baer analyst Carsten Menke said in a note.

Elsewhere, palladium XPD= rose 2% to $2,985.44 per ounce after hitting an all-time high last week on supply shortfall worries.

UBS raised its end-June and end-September price forecasts for the metal, used mainly in emission-reducing auto catalysts for vehicles, to $3,100 per ounce. nFWN2MU2OU

The bank expects the palladium market to be under-supplied by about 1 million ounces this year.

Silver XAG= edged 0.2% higher to $27.48 per ounce, while platinum XPT= climbed 1.5% to $1,267.86 per ounce. Both metals earlier reached a more than two-month peak.

(Reporting by Eileen Soreng, Brijesh Patel and Arundhati Sarkar in Bengaluru
Editing by Mark Heinrich)

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