Gold steady as US dollar holds gains made after US jobs data

[BENGALURU] Gold held steady near two-week lows on Monday, with the US dollar remaining supported by expectations of monetary tightening in the United States following stronger-than-expected jobs data last week.

"The job data was very good; gold is pressured," said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold.

"There is not much other geopolitical uncertainty in the world, no extreme events. That's why risk-aversion is subsiding and gold prices aren't doing well."

Gold is used as an alternative investment during times of political and financial uncertainty.

Spot gold had risen 0.1 per cent to US$1,258.69 per ounce by 0347 GMT. On Friday, it touched its lowest in just under two weeks at US$1,254 an ounce and registered its first weekly decline in four.

US gold futures for December delivery fell 0.02 per cent to US$1,264.30 per ounce.

Asian stocks advanced on Monday, taking their cue from Wall Street, while the US dollar moderated but retained most gains made on stronger-than-expected July jobs growth and the promise of a US tax plan that will repatriate corporate profits.

A stronger US dollar makes bullion more expensive for holders of other currencies, while higher interest rates lead to increased bond yields and dampen demand for non-yielding gold.

US employers hired more workers than expected in July and raised their wages, signs of labour market tightness that likely clear the way for the Fed to announce a plan to start shrinking its massive bond portfolio.

"Investors were quick to liquidate some long positions with market pricing of another rate hike by the Fed rising slightly as a consequence," said ANZ Research in a note.

"However, the losses were limited, suggesting investors are not completely convinced."

Spot gold may retest support at US$1,255 per ounce, a break below which could cause a further loss to the next support at US$1,247, according to Reuters technical analyst Wang Tao.

"We think gold is going to trade in a very tight range because of the low level of liquidity in the market due to the holidays (in Asia)," said Mr Xu.

In other precious metals, silver was flat at US$16.23 per ounce, having retouched Friday's over two-week low of US$16.17 an ounce earlier in the session.

Platinum climbed 0.1 per cent to US$960.20 per ounce, after hitting its highest since late April at US$970.10 in the previous session. It gained over 3.2 per cent last week, its highest since early January.

Palladium fell 0.1 per cent to US$876.60 per ounce.

REUTERS