Gold flat as Fed expected to stick to tapering plans

Gold prices were flat on Monday as the bullion was caught between a dip in the dollar and fears that the U.S. Federal Reserve would start paring stimulus this year despite weak jobs data.

Spot gold was flat at $1,756.25 per ounce by 0053 GMT. Prices hit a two-week peak on Friday after the payrolls data but pared gains during the session.

U.S. gold futures were unchanged at $1,756.80.

The dollar index inched down 0.1%. The benchmark U.S. 10-year Treasury yields touched its highest level since early June on Friday.

Data from the Labor Department on Friday showed U.S. nonfarm payrolls increased by 194,000 jobs last month way below economists’ forecast of 500,000.

The Fed may move to begin reducing its support for the economy next month despite a sharp slowdown in jobs gains last month as the latest U.S. surge in Covid-19 cases crested and began to recede.

Bullion is seen as a hedge against the inflation and currency debasement likely from the widespread stimulus. The Fed’s tapering could tackle both those conditions, diminishing gold’s appeal.

The U.S. job market will continue to feel the effects of Covid-19, but it is too soon to say it is “stalling,” San Francisco Federal Reserve President 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 tons on Friday from 986.54 tons on Thursday.

Physical gold rates in India flipped to a discount for the first time in over two months last week as a rise in local prices curbed demand, while buying in China was expected to pick up after the Golden Week holiday.

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

Palladium rose 2.6% to $2,130.94, having earlier hit a high since Sept. 13.