Picture: REUTERS
Picture: REUTERS

Bengaluru — Gold was steady on Monday as investors await cues from the US Federal Reserve on interest rates later this week, while trying to size up the chances of a new round of US tariffs on Chinese goods.

Spot gold was flat at $1,460 per ounce by 7am SA time. US gold futures was flat at $1,464.50. The US Fed will meet on December 10-12 for an interest rate decision and investors are likely to focus on the outlook for next year and beyond.

Strong US jobs data last week has renewed bets that the Federal Reserve will stand pat on interest rates. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Meanwhile, the December 15 deadline is still in place for a new round of US tariffs on about $156bn worth of Chinese imports, White House economic adviser Larry Kudlow said on Friday.

“Markets are waiting to size up what happens, they’re waiting both for the US Federal Reserve meeting and some sort of last-minute deal [between the US and China],” said Ilya Spivak, a senior currency strategist at DailyFx. “We’ve seen that from this administration in the White House, this kind of brinkmanship where they may decide to cancel tariffs at the last second by a tweet late night on December 14.”

Gold has gained more than 13% so far this year after the Fed cut rates three times against the backdrop of the US-China trade war and its effect on economy.

Biggest fall

“If the tariffs go into effect into the weekend… gold then looks decidedly cheap and we might see an upside breakout,” Spivak said. However, limiting gold’s gains, data showed growth in China’s imports.

This follows solid US job growth in November, on which gold prices shed 1% on Friday, registering their biggest daily percentage fall in a month.

“Prices are likely to remain in pressure with better-than-expected data we saw late last week,” ANZ analyst Daniel Hynes said. Speculators upped their bullish positions in Comex gold in the week to December 3, data showed.

However, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.26% to their lowest since September 19 on Friday.

Palladium shed 0.1% to $1,876.78 per ounce, having hit a record peak at $1,880.65 in the previous session. Silver rose 0.1% to $16.57 per ounce, after touching its lowest since early August in the last session, while platinum eased 0.4% to $892.30. 

Reuters