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Gold flat after US government shutdown ends

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Gold steadied on Monday as the dollar hovered near three-year lows, but bullishness in the wider financial markets as the US government shutdown ended capped the metal's gains.

[NEW YORK] Gold steadied on Monday as the dollar hovered near three-year lows, but bullishness in the wider financial markets as the US government shutdown ended capped the metal's gains.

Before coming off its highs, platinum hit another four-month peak, earlier narrowing the price gap to sister metal palladium to below US$100 per ounce.

The US Senate voted to pass a temporary spending plan through Feb 8 to end the government shutdown.

The dollar pared losses against a basket of currencies and US stocks surged in afternoon trading after senators reached the deal, ending the 2-1/2-day shutdown that world markets had largely taken in stride.

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Market voices on:

"Gold's relatively muted today. Most people were looking at the US government shutdown. Historically you don't really get much market reaction to this," said Daniel Ghali, commodities strategist at TD Securities in Toronto.

Spot gold edged up 0.05 per cent at US$1,332.13 per ounce by 1.47pm EST (1847 GMT). The precious metal fell 0.5 per cent last week, its first weekly decline in six weeks, after hitting four-month highs last Monday.

US gold futures for February delivery settled down US$1.20, or 0.1 per cent, at US$1,331.90 per ounce.

Platinum dropped 2.1 per cent to US$991.74 an ounce, after earlier touching its highest since Sept 8 at US$1,018.80, while palladium fell 0.7 per cent to US$1,096.97 an ounce.

"As prices edged above US$1,000 per ounce, some money managers might have wanted to take some profits," Mr Ghali said of platinum, which has had a sustained rally since mid-December.

"Recent implementation of more stringent emissions standards in China is expected to boost demand for (platinum)," SP Angel said in a note.

"Stockpiles in warehouses tracked by the New York Mercantile Exchange have shrunk to their lowest since 2016. With 70 per cent of global supply sourced in South Africa, improving rand-dollar exchange is raising the relative cost of producing the metal,"it added.

US Treasury yields, which have tended to fall during previous government shutdowns, rose as investors saw limited economic fallout from the political standoff and focused instead on a global economy motoring ahead and US inflation pressures.

Rising yields tend to weigh on gold by increasing the opportunity cost of holding non-yielding bullion.

Silver was down 0.2 per cent at US$16.97 an ounce.

REUTERS

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