Gold holds steady as investors weigh faster Fed taper prospects

[BENGALURU] Gold prices held steady on Monday (Dec 6) as market participants weighed the prospect of a faster ending to pandemic-era asset purchases by the US Federal Reserve after data suggested the labour market was rapidly tightening.

Spot gold was little changed at US$1,783.91 per ounce by 12.38 am GMT. US gold futures rose 0.1 per cent to US$1,785.00.

The dollar index edged 0.1 per cent higher, raising gold's cost for buyers holding other currencies.

Fed policymakers look likely to accelerate the wind-down of their asset purchases when they meet later this month as they respond to a tightening labour market and move to open the door to earlier rate hikes than they had projected.

US employment growth slowed considerably in November, but the unemployment rate plunged to a 21-month low of 4.2 per cent.

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest bearing gold.

A measure of US services industry activity unexpectedly rose in November, hitting a record high as businesses boosted hiring, but there was little sign that supply constraints were easing and prices remained high.

Bank of England policymaker Michael Saunders, who voted for an interest rate hike last month, said on Friday (Dec 3) he wanted more information about the impact of the new Omicron coronavirus variant before deciding how to vote this month.

Euro zone business activity accelerated last month but the bounce may be temporary as demand growth weakened and fears about the Omicron variant put a dent in optimism, a survey showed on Friday.

Spot silver rose 0.3 per cent to US$22.57 an ounce. Platinum rose 0.8 per cent to US$939.78, while palladium increased 0.7 per cent to US$1,821.49.

REUTERS