* Potential credit limit extension calming effect on the market-analyst
* Dollar nears one-year high
* Palladium set for best day in two weeks (update price)
October 7 (Businesshala) – Gold fell on Thursday as a drop in US weekly initial jobless claims, ahead of monthly jobs data for the weekend, boosted Treasury yields and raised bets that the US Federal Reserve will soon increase its earnings. Financial support may begin to take off.
As of 13:34 a.m. EDT (1734 GMT), spot gold was down 0.3% at $1,757.30 an ounce. US gold futures fell 0.2% to end at $1,759.2.
The number of Americans filing new claims for jobless benefits last week fell by the most in three months, indicating that a recovery in the labor market was gaining momentum after the recent recession.
Jim Wyckoff, senior analyst at Kitco Metals, said: “The report helped raise bond yields and a slight uptick in the US stock market, which put pressure on gold.”
Lower incentives and higher interest rates raise bond yields, which translates into an increased opportunity cost of holding non-yielding bullion.
In addition, the US debt limit is likely to be pushed to December. Therefore, it had a calming effect on the market, bullish for stocks and bearish for gold, Wyckoff said.
The dollar eased slightly from near one-year highs, fueled by inflation concerns and hopes the Fed will act soon to normalize policy.
While gold has traditionally been considered an inflation hedge, a stronger dollar makes it more expensive for holders of other currencies.
A strong showing of private jobs in September ahead of Friday’s employment numbers also encouraged bets that the Fed could start tapering off soon.
But given the “record high” number of open job positions in the United States, “the positive surprise on non-farm payrolls should be adjustable for the gold market without a major sell-off,” said Julius Baer analyst Carsten Menke.
Spot silver held steady at $22.59 an ounce, platinum fell 0.2% to $982.37 and palladium jumped 3.7% to $1,958.61 for its best day since Sept. 22. (Reporting by Bharat Govind Gautam and Arundhati Sarkar in Bengaluru; Editing by Uttaresh V and Shailesh Kuber)