Gold at over two-week high as dollar, yields weaken; US payrolls data awaited

By Anushree Mukherjee

Nov 5 (Reuters) - Gold prices hit a more than two-week high on Thursday as US dollar and Treasury yields weakened after lower oil prices eased inflation concerns, while investors awaited key US payrolls data for rate policy clues.

Spot gold was up 1.57% to $4,123.39 per ounce by 9:14 a.m. ET (1414 GMT) after hitting a session high of $4,146.63 per ounce, a level last seen on October 20.

Gold had jumped nearly 3.4% on Wednesday, its sharpest daily rise since August 19, with prices up over $250 this week from a one-year low of $3,869.85 hit on Friday.

US gold futures for December delivery rose 1.5% to $4,132.90 per ounce.

The US dollar .DXY hovered at its lowest level since September 30, making greenback-priced bullion more affordable for holders of other currencies, while the benchmark 10-year Treasury yield was at a near-two-month low. USD/US/

"It's not that at this point rate hike expectation has completely disappeared," David Meger, director of metals trading at High Ridge Futures, said. "As we've seen the weaker energy prices, there's an expectation that we will see some fears of inflation subside and the potential for a lesser need for rate hikes down the road."

Brent crude remained below $100 a barrel after tumbling nearly 9% in the previous session on hopes that strong Democratic gains in US elections could reduce the risk of further escalation in the Iran conflict.

Traders currently see an 80% chance that the Federal Reserve will raise rates in December, according to CME's FedWatch tool. Higher interest rates increase the opportunity cost of holding non-yielding gold.

Investors are also awaiting the US non-farm payrolls report due on Friday for further cues on the central bank's trajectory.

"The payrolls have been volatile of late, and gold could be vulnerable to a stronger-than-expected print, which would likely confirm an already highly expected December rate hike," said independent metals trader Tai Wong.

Among other metals, spot silver rose 1.2% to $52.81 per ounce, platinum gained 2.3% to $1,531.84 and palladium climbed 4.67% to $1,051.46.