Gold bullion prices steady as doubts emerge over early US Federal Reserve taper

GOLD prices were steady near recent highs on Tuesday, supported by expectations that the US Federal Reserve would delay a tapering in its pandemic-era asset purchases, while the European Central Bank’s meeting this week was also in focus.

Spot gold was steady at $1,823.92 per ounce by 0336

GMT, while US gold futures fell 0.4% to $1,826.20.

Prices had hit a 2-1/2 month high last week, after soaring coronavirus disease 2019 (COVID-19) cases driven by the Delta variant slammed a recovery in US job growth in August.

“The worse the spread of COVID-19, the higher the probability for gold prices to rise... Gold is a key beneficiary of bad news and inflation until reserve banks cease or reduce easing,” said Michael Langford, director at corporate advisory AirGuide.

A strong labor market is a prerequisite for the US central bank to start withdrawing its stimulus measures, with Fed

Chair Jerome Powell indicating last month that the bank would remain cautious in its decision to raise interest rates.

Some investors view gold as a hedge against the inflation that may follow stimulus measures, while lower interest rates reduce the opportunity cost of holding non-yielding bullion.

The ECB will meet on Thursday and is likely to debate a cut in its stimulus measures as the euro zone economy roars back to life.

“We’ve got the two biggest central banks probably moving towards taper, but they’re still going to be quite dovish as far as raising interest rates... I continue to think this is what’s supporting gold when it drops,” said Stephen Innes, managing partner at SPI Asset Management.

The dollar index hovered near a one-month low.

Silver fell 0.1% to $24.65 per ounce, platinum rose 0.2% to $1,020.59, and palladium inched up 0.1% to $2,412.13. —