NEW YORK: Gold retreated on Thursday as the dollar advanced and outweighed support for safe-haven bullion from lingering economic risks including the US debt ceiling deadlock, while traders digested the impact of weak data on the interest rate outlook.

Spot gold was down 0.6% to $2,017.00 per ounce by 11:41 a.m. EDT (1541 GMT), while US gold futures shed 0.7% to $2,023.00.

Gold popped up after data showed a jump in weekly jobless claims and the smallest annual increase in producer prices in over two years.

However, the metal soon gave up those gains as the dollar, a rival safe-haven, advanced, making bullion more expensive for overseas buyers.

Investors also took stock of comments from Minneapolis Fed chief Neel Kashkari that an extended period of high rates would be necessary if inflation stayed stubbornly high.

While this weighs on sentiment for gold “to a certain extent, the precious metal remains in its uptrend channel established in November,” said Alexander Zumpfe, a precious metals dealer at Heraeus.

While gold is considered a hedge against inflation, elevated interest rates dim appeal for zero-yield bullion.

“The rate-hike period may be coming to an end, but the Federal Reserve may take a wait-and-see approach to ensure inflation is sustainably cooling before making any further decisions,” Zumpfe said.