Gold climbs nearer one-month peak, focus on NFP data

By Anushree Ashish Mukherjee

(Reuters) - Gold firmed nearer a one-month high on Thursday after data showed U.S. weekly jobless claims rose last week, while market focus shifted to the U.S. non-farm payrolls data for more cues on the Federal Reserve's policy path.

Spot gold was up 0.9% at $2,054.89 per ounce by 02:51 p.m. ET (1951 GMT), hitting its highest level since Jan. 3 earlier in the session.

U.S. gold futures settled 0.2% higher at $2071.1.

The Labor Department said initial jobless claims increased to a seasonally adjusted 224,000 for the week ended Jan. 27. A separate report showed that U.S. worker productivity grew faster than expected in the fourth quarter.

Gold is still in a "bad hangover" after the Fed's reaction but a small rally is happening because of the initial claims number, said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago.

The Fed left interest rates unchanged and knocked down the idea that the U.S. central bank could cut rates in the spring, but dropped a long-standing reference to possible further hikes.

According to the CME Fed Watch Tool, traders now expect about a 96% chance of a rate cut in May.

Markets also took stock of troubles at regional U.S. lender New York Community Bancorp, increasing appeal for safe-haven assets such as bullion.

Investors' focus now shifts to Friday's U.S. nonfarm payrolls for further clarity on the interest rate path.

"Gold is expected to trade with a neutral to bearish bias, though losses could be limited ahead of the U.S. nonfarm payroll report due on Friday," said Jigar Pandit, Head Commodity and Currency Business at BNP Paribas' Sharekhan.

Spot silver rose 1.2% to $23.18 per ounce, while platinum fell 0.6% to $912.60 and palladium shed 1.3% to $963.09.

(Reporting by Anushree Mukherjee in Bengaluru, editing by David Ljunggren, Nick Zieminski, Hugh Lawson and Krishna Chandra Eluri)