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Gold flat as subdued bond yields counter faster Fed taper betsBullion rose 1% on Friday after data showed US employment growth slowed considerably in November
Reuters
Last Updated IST
Spot gold was little changed at $1,782.95 per ounce by 0419 GMT. US gold futures were flat at $1,783.60. Credit: AFP Photo
Spot gold was little changed at $1,782.95 per ounce by 0419 GMT. US gold futures were flat at $1,783.60. Credit: AFP Photo

Gold prices were flat on Monday, as the metal was caught between subdued US bond yields and the prospect of the Federal Reserve tightening policy at a faster pace which dimmed its appeal.

Spot gold was little changed at $1,782.95 per ounce by 0419 GMT. US gold futures were flat at $1,783.60.

US 10-year Treasury yields hovered near a more than two-month low hit on Friday. Thirty-year Treasury yields were also close to their lowest since the start of this year. Weaker yields decrease gold's opportunity cost.

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Bullion rose 1 per cent on Friday after data showed US employment growth slowed considerably in November.

But the data did little to alter expectations of the Fed tapering its stimulus measures at a faster pace, as policymakers likely respond to signs of a tightening labour market with the unemployment rate plunging to a 21-month low.

The Fed's two-day policy meet is set to begin on Dec. 14.

"A faster taper announcement looks like a certainty if data on the Omicron variant this week and next confirms it is milder in severity, so gold could come under sustained pressure and potentially trade as low as $1,720 next week," said Jeffrey Halley, senior market analyst at Oanda.

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest bearing gold.

Market participants now eye US consumer price data on Friday.

"An annual print above 7.0 per cent could see US yields steepen once again, and gold will move lower," Halley said, adding that any potentially rally in gold back above $1,800 will be fragile and lack momentum.

Spot silver fell 0.1 per cent to $22.48 an ounce. Platinum rose 0.4 per cent to $935.74, while palladium declined 0.1 per cent to $1,807.83.

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(Published 06 December 2021, 12:24 IST)