Gold hits 2-week high on hopes of smaller U.S. rate hikes

Dec 1(Reuters) - Gold prices climbed a two-week high in early Asian trade on Thursday, after U.S. Federal Reserve Chair Jerome Powell's speech reinforced expectations of smaller interest rate hikes ahead.

FUNDAMENTALS

* Spot gold was up 0.4% to $1,775.77 per ounce, as of 0039 GMT, having hit its highest level since Nov. 16.

* U.S. gold futures rose 1.7% to $1,788.90.

* Powell said on Wednesday it was time to slow the pace of coming interest rate hikes while also signalling a protracted economic adjustment to a world where borrowing costs will remain high, inflation comes down slowly, and the U.S. remains chronically short of workers.

* Market participants now expect a 91% chance of a 50 basis points rate hike in the U.S. central bank's upcoming December meeting.

* Lower interest rates tend to boost bullion's appeal as the it reduces the opportunity cost of holding the non-yielding asset, which ended November more than 8% higher — its biggest monthly gain since July 2020.

* Meanwhile, U.S. private payrolls increased far less than expected in November, suggesting demand for labour was cooling amid high interest rates, a survey showed on Wednesday.

* Investors' attention now turns to the U.S. Labor Department's non-farm payrolls data on Friday, which could influence Fed's policy decisions.

* Spot silver gained 0.3% to $22.26, platinum rose 0.6% to $1,038.46 and palladium rose 0.6% to $1,892.35.

DATA/EVENTS (GMT)

0030 Japan JibunBK Mfg PMI Final SA Nov

0030 Australia Capital Expenditure Q3

0145 China Caixin Mfg PMI Final Nov

0700 UK Nationwide House Price MM, YY Nov

0850 France S&P Global Mfg PMI Nov

0855 Germany S&P Global/BME Mfg PMI Nov

0900 EU S&P Global Mfg Final PMI Nov

1000 EU Unemployment Rate Oct

1330 US Consumption, Adjusted MM Oct

1330 US Initial Jobless Clm Weekly

1445 US S&P Global Mfg PMI Final Nov

1500 US ISM Manufacturing PMI Nov (Reporting by Ashitha Shivaprasad in Bengaluru; editing by Uttaresh.V)