NEW YORK: Gold prices gained on Wednesday as bond yields fell after weaker-than-expected US private payrolls data bolstered expectations that the Federal Reserve would cut interest rates later this year.

Spot gold was up 0.8% at $2,346.99 per ounce, as of 1449 GMT, after a 1% fall in the previous session. US gold futures rose 0.8% to $2,367.20.

Benchmark US Treasury yields fell to their lowest since April 5 after data showed US private payrolls increased less than expected in May. A weak labour number adds fuel to the fire that the Fed may have to cut rates before year end, boosting gold’s appeal, said Bob Haberkorn, senior market strategist at RJO Futures. Lower interest rates decrease the opportunity cost of holding non-yielding gold.

According to the CME FedWatch Tool, traders now see about a 67% chance of a Fed rate cut by September, versus below 50% last week.

Other key US economic reports, including the ISM services data due at 1400 GMT and the non-farm payrolls report scheduled for Friday, will have the potential to influence gold prices, analysts said.

“An upside print in the NFP could see the expected timeline for the first rate cut shift back in favour of November, while a downside miss could see September firm as the favoured month for potential action from the Fed,” Tim Waterer, chief market analyst at KCM Trade, said in a note.

On the physical front, net purchases of gold by global central banks rose to 33 metric tons in April from a revised net buying of 3 tons in March, the World Gold Council (WGC) said, signalling the sector’s continuing strong appetite for the metal despite high prices.

Among other precious metals, spot silver rose 0.7% $29.68 per ounce, platinum was up 0.4% at $991.00 and palladium gained 2.1% to $934.50.