Gold flat as Fed expected to stick to tapering plans

[BENGALURU] Gold prices were flat on Monday as the bullion was caught between a dip in the dollar and fears that the US Federal Reserve would start paring stimulus this year despite weak jobs data.

Spot gold was flat at US$1,756.25 per ounce by 12.53am GMT. Prices hit a two-week peak on Friday after the payrolls data but pared gains during the session.

US gold futures were unchanged at US$1,756.80.

The dollar index inched down 0.1 per cent. The benchmark US 10-year Treasury yields touched its highest level since early June on Friday.

Data from the Labor Department on Friday showed US nonfarm payrolls increased by 194,000 jobs last month way below economists' forecast of 500,000.

The Fed may move to begin reducing its support for the economy next month despite a sharp slowdown in jobs gains last month as the latest US surge in Covid-19 cases crested and began to recede.

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Bullion is seen as a hedge against the inflation and currency debasement likely from the widespread stimulus. The Fed's tapering could tackle both those conditions, diminishing gold's appeal.

The US job market will continue to feel the effects of Covid-19, but it is too soon to say it is "stalling", San Francisco Federal Reserve President Mary Daly said on Sunday.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.2 per cent to 985.05 tonnes on Friday from 986.54 tonnes on Thursday.

Physical gold rates in India flipped to a discount for the first time in over two months last week as a rise in local prices curbed demand, while buying in China was expected to pick up after the Golden Week holiday.

Spot silver fell 0.1 per cent to US$22.64 per ounce, while platinum eased 0.4 per cent to US$1,022.42.

Palladium rose 2.6 per cent to US$2,130.94, having earlier hit a high since Sept 13.

REUTERS