Gold stagnates as Fed should stick to its reduction plans

Gold prices were flat on Monday as bullion was caught between a weaker dollar and fears the US Federal Reserve would start cutting stimulus this year despite weak employment data.

Spot gold was flat at $ 1,756.25 an ounce at 12:53 am GMT. Prices hit a two-week peak on Friday after the payroll data, but reduced gains during the session.

US gold futures were unchanged at $ 1,756.80.

The dollar index edged down 0.1%. The benchmark index for 10-year US Treasuries hit its highest level since early June on Friday.

Labor Department data on Friday showed non-farm payrolls in the United States increased by 194,000 jobs last month, well below economists’ forecast of 500,000.

The Fed could start reducing its support for the economy next month despite a sharp slowdown in job gains last month as the latest spike in Covid-19 cases in the United States peaked and began to rise. to move back.

The bullion is seen as a hedge against inflation and currency depreciation likely due to the widespread stimulus. The Fed’s tapering could tackle both of these conditions, lowering the appeal of gold.

The U.S. labor market will continue to feel the effects of Covid-19, but it is too early to say that it is “stagnant,” San Francisco Federal Reserve Chairman Mary Daly said on Sunday.

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

Physical gold rates in India fell for the first time in more than two months last week as rising local prices dampened demand, while buying in China is expected to resume after the Golden Week holiday.

Spot silver fell 0.1% to $ 22.64 an ounce, while platinum fell 0.4% to $ 1,022.42.

Palladium rose 2.6% to $ 2,130.94, after peaking since September 13.