Gold hits two-week high; payrolls data in focus

By Rahul Paswan and Kavya Balaraman

(Reuters) - Gold prices climbed to a two-week high on Thursday as weaker-than-expected U.S. jobs data fanned hopes of a Federal Reserve interest rate cut later this year with focus shifting to non-farm payrolls data due on Friday.

Spot gold was up 0.8% at $2,372.46 per ounce as of 1757 GMT.

U.S. gold futures settled 0.6% higher at $2,390.90.

Data on Wednesday showed U.S. private payrolls increased less than expected in May while data for the prior month was revised lower.

"Yesterday's weaker ADP jobs number gave the bulls a little bit of confidence that maybe tomorrow's (payroll) report won't be stronger than expected, and that's going to be friendly for the gold and silver markets," said Jim Wyckoff, senior analyst at Kitco Metals.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

"If we were to see a much stronger than expected jobs report, the expectation would be then that the Fed may not be able to lower rates sooner than later" which could add some light pressure to the gold market, said David Meger, director of alternative investments and trading at High Ridge Futures.

The Fed will likely cut its key interest rate in September and once more this year, according to a majority of forecasters in a Reuters poll.

Gold prices are expected to hit another record high this year, despite a dip in physical demand, consultancy Metals Focus said.

Meanwhile, global stocks hit an all-time high and the euro rose after the European Central Bank cut interest rates for the first time in nearly five years, but also signalled that further moves could take a while. [MKTS/GLOB]

Among other precious metals, spot silver rose 4.3% to $31.30 per ounce and platinum was up 1.6% at $1,007.70, while palladium rose 0.2% to $933.56.

(Reporting by Rahul Paswan in Bengaluru; Editing by Sriraj Kalluvila, Ravi Prakash Kumar and Matthew Lewis)