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Update: Gold Rises as Weak US Payrolls Pressure the Dollar, Support Rate Outlook

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(Updates gold's price in the second paragraph.)

Gold moved higher midafternoon Thursday as the U.S. dollar fell sharply after U.S. hiring slowed more than expected last month.

Gold for August delivery was last seen up 1.1% to $4,127.80 per ounce.

The U.S. Bureau of Labor Statistics reported the economy added just 57,000 jobs last month, down from 129,000 in May and well below expectations for an increase of 115,000, according to MarketWatch.

The weaker-than-expected data eased concerns that the Federal Reserve would need to raise interest rates this year. Federal Reserve Chair Kevin Warsh on Wednesday reinforced expectations that the central bank will keep rates unchanged, saying falling energy prices are easing the inflation concerns that followed the war with Iran and had boosted the dollar.

"Fed Chair Warsh dampened speculation that the Fed may raise interest rates this year, saying inflation risks have eased in recent weeks alongside lower energy prices. Meanwhile, the one-year US inflation swap has fallen sharply from a May peak of 3.5% to around 2.1%, reinforcing expectations that inflation concerns may gradually fade and potentially helping establish a floor under precious metals," Saxo Bank noted.

The dollar fell sharply following the jobs data, with the ICE dollar index last seen down 0.5 points to 100.89. Treasury yields were little changed, with the US two-year note last seen paying 4.187%, up 0.2 basis points, while the yield on the 10-year note was up 0.1 points to 4.486%.

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