Gold gains on lower US dollar, yields; investors eye nonfarm payroll data

Gold and silver prices rose on Wednesday as the U.S. dollar and Treasury bond yields fell after data showed December retail sales growth stalled, signalling a softening economy ahead of key jobs data later in the day.

Spot gold XAU= was 0.7% higher at $5,056.82 per ounce by 0648 GMT. U.S. gold futures GCcv1 for April delivery gained 1% to $5,080.90 per ounce.

Spot silver XAG= was up 2.2% at $82.44 per ounce, after falling more than 3% in the previous session.

"Yields being lower are obviously supportive of gold today... After soft retail sales numbers, there's the expectation that perhaps, further and deeper rate cuts may be needed more imminently than previously thought," Capital.com senior market analyst Kyle Rodda said.

U.S. yields fell to near one-month lows after a raft of data suggested the economy may be softening, giving the U.S. Federal Reserve more room to cut interest rates. Lower U.S. yields reduce the opportunity cost of holding non‑yielding assets such as gold.

Investors expect at least two 25-basis-point rate cuts in 2026, with the first one expected in June. FEDWATCH

They now await the release of the non-farm payrolls report for January, due later in the day, with a Reuters survey of economists showing a likely 70,000 increase in jobs last month after 50,000 jobs were added in December.

"Moves of more conviction from either gold or the dollar may be reserved until after the NFP release, with U.S. jobs data likely to factor into the Fed's interest rate trajectory. Any softness in the jobs data for January could help gold's rebound efforts," KCM chief analyst Tim Waterer said in a note.

The U.S. dollar index .DXY edged down to a near two-week low on Wednesday, making greenback-priced metals cheaper for overseas buyers. US/USD/

Spot platinum XPT= rose 1.4% to $2,116.25 per ounce, while palladium XPD= added 1.3% to $1,730.50.

-Ishaan Arora/Reuters