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Markets

Gold eases as dollar climbs, traders seek cue from jobs data

  • US 10-year Treasury yields hit a peak since June
  • Gold muted by rising expectations for tapering: analyst
Published October 6, 2021
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Gold prices edged lower on Wednesday pressured by a resilient dollar and higher US bond yields in the run-up to Friday's US labour market report that could determine the Federal Reserve's tapering schedule.

Spot gold fell 0.2% to $1,756.30 per ounce by 1126 GMT, while US gold futures shed 0.5% to $1,752.90.

Some investors flocked to the dollar, which competes with gold as a safe-haven, to hedge against concerns that soaring energy prices could exacerbate inflation and slow growth.

A stronger dollar also dents bullion's appeal for overseas buyers. Yields on 10-year US Treasuries also advanced.

Xiao Fu, head of commodities markets strategy at Bank of China International said that even if the non-farm payrolls data is not "spectacular and just in line with expectations", some Fed members already think the condition for tapering has been fulfilled, and that is putting pressure on gold.

Gold eases, but holds above $1,750 as US jobs data looms

Expectations are for 488,000 jobs to have been added in September, enough to keep the Fed on course to begin tapering before year-end.

Therefore, markets are unwilling to make a decisive move ahead of the report, as they "grow more accustomed to the heightened prospects of the Fed's tapering which is boosting the dollar and US real yields," said Han Tan, chief market analyst at Exinity.

Interest rate hikes - with central banks, including from New Zealand, having already raised rates - push government bond yields up, translating into a higher opportunity cost for holding non-interest yielding bullion.

Gold is unable to take advantage of the current risk-off trading stance, and will have to clear the zone at $1,765-$1,770 to unlock the door to further gains up to first $1,777 and then $1,790, ActivTrades technical analyst Pierre Veyret said in a note.

Spot silver fell 1.4% to $22.35 per ounce, platinum slipped 0.8% to $954.00, and palladium shed 1.6% to $1,883.69.

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