Gold eases but on track for first weekly gain in four weeks

[BENGALURU] Gold fell on Friday as investors booked profits from sharp gains in the previous sessions while equities rallied, but bets for fresh US stimulus buoyed bullion's appeal as an inflation hedge and kept it on track for its first weekly gain in four weeks.

Spot gold was down 0.3 per cent at US$1,834.92 per ounce by 2.05pm EST (1905 GMT), on track for a weekly gain of about 2.6 per cent. US gold futures settled down 0.1 per cent at US$1,840.

"After a superb four-day bounce, gold is running into profit-taking ahead of a key technical level at US$1,850; considered a significant hurdle as it was remarkably resilient as support over the past two months," said Tai Wong, head of base and precious metals derivatives trading at BMO.

"Gold's reaction to a notably weak US payrolls report - selling off instead of rallying - suggests bargain-hunters might be sated for the moment," adding there could be some modest but steady "programme selling" possibly by exchange traded funds.

Data on Friday showed the US economy added the fewest workers in six months in November, cementing expectations of more fiscal stimulus that lifted Wall Street's main indexes to all-time highs.

A bipartisan, US$908 billion coronavirus aid bill drew support in the US Congress on Thursday.

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Non-yielding bullion is considered a hedge against inflation likely to result from the unprecedented stimulus.

"Beyond near-term corrections, a weaker dollar, negative real rates, concerns surrounding inflation and expectations of further fiscal stimulus amid accommodative monetary policy are likely to keep gold price risk-skewed to the upside," Standard Chartered analyst Suki Cooper said.

Meanwhile, the US dollar was headed for its worst week since early November, making gold cheaper for holders of other currencies.

Platinum gained 2.9 per cent to US$1,059.17 per ounce, and was on track for its best week since late March.

Silver rose 0.2 per cent to US$24.11 an ounce, while palladium was up 2.3 per cent at US$2,353.56.

REUTERS