Gold gains as US jobs data eases rate-hike fears, but heads for weekly loss

By Noel John

Oct 2 (Reuters) - Gold rose over 1% on Friday after weaker-than-expected US jobs data for September eased concerns about a Federal Reserve rate hike this month, although a stronger dollar and elevated Treasury yields kept bullion on track for a weekly loss.

Spot gold rose 1.1% to $4,223.49 per ounce by 09:05 a.m. EDT (1305 GMT), but was down about 1.5% for the week so far. US gold futures gained 1.2% to $4,254.10.

The US dollar edged lower after data showed US job growth slowed more than expected in September, but was headed for a weekly gain, while yields on 10 and 30-year Treasuries hit their highest levels since 2002 on Thursday. USD/ US/

US nonfarm payrolls rose by 29,000 last month after a downwardly revised increase of 133,000 in August, the Labor Department's closely watched employment report showed on Friday. Economists polled by Reuters had forecast payrolls advancing 90,000 after a previously reported 162,000 surge in August.

Traders currently see about a 14% chance of a US rate hike this month, down from 28% before the jobs data and around 70% earlier in the week, according to the CME FedWatch Tool.

"Interest rate hike expectations have dropped slightly and it has weakened the dollar a bit and is leading to the rally we are seeing in gold," Marex analyst Edward Meir said.

"The complex was also quite oversold and so a bounce is in order. But the charts still look fairly grim and we could push lower still if the rate cycle resumes its ascent."

The latest softer-than-expected inflation data, along with opposition from at least two top policymakers to another rate hike in October, have strengthened investor bets that the Fed will keep rates on hold later this month.

Bullion has fallen about 20% since the US-Israeli war with Iran began in late February, pressured by expectations that war-driven inflation could keep interest rates higher for longer.

"Although markets remain aware that the Fed remains chiefly focused on its price stability mandate, spot gold may yet carve out further near-term upside, assuming Treasury yields have truly seen their high," said Han Tan, chief market analyst at Bybit.

Spot silver rose 2% to $62.07, platinum gained 1% to $1,740.53 and palladium advanced 2.2% to $1,197.47. All three metals were poised for weekly losses.