Gold steadies

GOLD prices were steady yesterday, having touched a fresh five-month peak early in the session, as the dollar weakened after a soft US jobs report fuelled speculation that the Federal Reserve may stop raising interest rates sooner than expected.

Spot gold inched up 0,1 percent to $1,248.59 per ounce, as of 0813 GMT, after hitting its highest since July 11 at $1,250.55 earlier in the session.

US gold futures rose 0,1 percent to $1,253.4 per ounce.

Weak data points from the United States have been putting pressure on the dollar index which is proving to be positive for gold, said Ajay Kedia, director at Kedia Commodities in Mumbai, adding that: “we expect a resistance level of $1,270 before the upcoming Fed meet”.

The dollar slid against the euro and the yen after data showed US non-farm payrolls increased by 155 000 jobs last month, below economists’ median forecast of 200 000 jobs, and the wage increase was softer than expected. Some Fed policymakers have struck a cautious tone about the economic outlook, possibly flagging a turning point in the monetary policy.

The Fed is widely expected to raise interest rates at its December 18-19 meeting, but the focus is on how many rate hikes will follow in 2019. Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding non-yielding bullion. Lower interest rates also tend to weigh on US yields and the dollar, in which gold is priced. — Reuters.