A box of 1kg gold bars. Picture: BLOOMBERG/WEI LENG TAY
A box of 1kg gold bars. Picture: BLOOMBERG/WEI LENG TAY

Bengaluru — Gold prices edged down on Monday, with a firmer dollar dimming bullion’s appeal, as investors eye a key US jobs report later this week that could influence the Federal Reserve’s timeline for tapering its asset purchases.

Spot gold fell 0.1% to $1,758.48 per ounce by 5.32am, after hitting $1,765.54, its highest since September 23. US gold futures rose 0.1% to $1,759.80.

The dollar index was up 0.1%, rebounding from its lowest level since September 29 hit earlier, making gold more expensive for buyers holding other currencies.

Investors now await US nonfarm payrolls data due on Friday that is expected to show an addition of 460,000 jobs in September, according to a Reuters poll of economists.

“Ultimately, for gold it’s all about Friday’s job report, but the bar remains very high for any change in the FOMC’s attitude towards a November taper,” said Stephen Innes, managing partner at SPI Asset Management, adding that bullion will likely trade at $1,740-$1,775 this week.

Gold is traditionally seen as an inflation hedge, though reduced central bank stimulus and interest rate hikes tend to push government bond yields up, in turn translating into a higher opportunity cost for gold that pays no interest.

Indicative of sentiment, SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings slipped 0.4% to 986.54 tonnes on Friday.

Providing some support to safe-haven bullion, however, were concerns over the broader economic impact of Chinese property developer Evergrande’s debt crisis, which weighed on risk sentiment.

“With gold near the lows of its recent range, it is attractive as a short-term hedge against potential political disruptions in Washington and elsewhere,” Innes said, cautioning that he was still bearish on gold’s long-term outlook.

Silver was down 0.1% at $22.51/oz. Platinum fell 0.1% to $971.22 and palladium dropped 0.5% to $1,908.80. 

Reuters

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