Gold retreats from three-week high as US dollar stabilises

GOLD prices slipped on Monday to retreat from a three-week high scaled in the previous session, as the US dollar regained some ground, making bullion more expensive for overseas buyers. Spot gold was down 0.5 per cent at US$1,672.30 per ounce, as of 0025 GMT. Bullion prices surged 3 per cent on Friday as the dollar fell nearly 2 per cent after US jobs data raised hopes about the US Federal Reserve being less aggressive on rate hikes going forward. US gold futures were flat at US$1,676.10.

The dollar index reclaimed some lost ground to edge up 0.1 per cent.

Although gold is considered a hedge against inflation, higher interest rates increase the opportunity cost of holding the non-yielding asset. US job growth increased more than expected in October, but the pace is slowing and the unemployment rate rose to 3.7 per cent, suggesting some loosening in labour market conditions. Four Fed policymakers on Friday indicated they would still consider a smaller interest rate hike at their next policy meeting, despite new data showing another month of robust job gains and only small signs of progress in lowering inflation. Physical gold demand in India eased last week with jewellers awaiting a dip in domestic prices to stock up for the wedding season following a festival rush.

Spot silver was down 1.6 per cent at US$20.49, platinum fell 1.4 per cent to US$947.40 and palladium lost 0.2 per cent to US$1,859.15. REUTERS