Gold inches up after weak data fuels U.S. rate cut bets [Video]

Gold prices drifted higher on Thursday after softer-than-expected U.S. economic data fueled hopes that the Federal Reserve could cut interest rates as soon as September.

Spot gold was up 0.3% at $2,362.10 per ounce, as of 0200 GMT after hitting a near two-week high in the previous session. U.S. gold futures was little changed at $2,369.80.

U.S. economic data on Wednesday, including a weak services and ADP employment reports, showed a slowing economy. A separate report showed an increase in initial applications for U.S. unemployment benefits last week.

Traders are now looking out for U.S. nonfarm payrolls data, due on Friday.

“A softer-than-expected ISM services report was the gift that Fed doves have been waiting for ahead of a NFP. A move to $2,400 is on the cards should NFP confirm the economic cracks we’re seeing elsewhere,” said Matt Simpson, senior analyst at City Index.

“I doubt we’ll be seeing the U.S. dollar index retest 106 any time soon, so we expect …