Gold gains 1% as poor U.S. data ignites growth worries
By Sumita Layek
Oct 3 (Reuters) - Gold jumped more than 1% to its highest in a week on Thursday as weak U.S. data deepened concerns over economic growth and bolstered bets for further interest rate cuts by the Federal Reserve.
Spot gold XAU= was up 0.5% at $1,507.43 per ounce by 11:24 a.m. EDT (1524 GMT). Earlier, prices had hit their highest since Sept. 25 at $1,518.50.
U.S. gold futures GCcv1 rose 0.4% to $1,513.30.
U.S. services sector growth slowed to its most anaemic pace in three years last month, and job growth in the largest segment of the economy was the weakest in half a decade, a survey of purchasing managers showed.
"We continue to see a string of weak economic data that exacerbate concerns about economic growth. On the back of that, we are seeing safe haven demand return significantly in products like gold," said David Meger, director of metals trading at High Ridge Futures.
"This also brings prospects of rate cuts at the end of October. So the likelihood of that rate cut continues to increase and lower interest rates are supportive for gold."
Data earlier in the week showed manufacturing contracted to the weakest level in a decade and hiring by U.S. private employers slowed further in September.
The weaker-than-expected U.S. economic data weighed on global financial markets, extending a stock slide that has pushed world equity benchmarks back to lows last seen in August. MKTS/GLOB
Adding to the economic uncertainty, Washington on Wednesday said it would slap tariffs on certain products from the European Union.
"Data is showing a slowdown and traders are gravitating into gold and precious metals," said Michael Matousek, head trader at U.S. Global Investors.
"The tariffs are pretty much what is causing the slowdown in the ISM numbers. More tariffs make people's anticipation of the economic data weaker, so you might as well start buying what will work in future and that is gold."
Further helping gold, the dollar fell to a four-week low against the yen and a one-week trough versus the euro. USD/
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares GLD, rose to 923.76 tonnes on Wednesday, very close to last week's 924.94 tonnes, their highest since mid-November 2016. GOL/ETF
Platinum XPT= rose 0.8% to $893.64 per ounce, while silver XAG= rose 0.3% to $17.60 an ounce.
Palladium XPD= was down 2.2% at $1,650.21 per ounce.
The metal used in vehicle exhausts to reduce harmful emissions is likely to rise still higher after growing demand from automakers and a gaping supply shortfall pushed prices to record levels above $1,700 an ounce this week, analysts said.
(Reporting by Sumita Layek in Bengaluru; Editing by Andrea Ricci)