PRECIOUS-Gold steadies as dollar eases; Fed tapering fears limit gains

  • 8/5/2021
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* Dollar index down 0.2% * BOE keeps interest rates and bond-buying programme on hold (Recasts, adds comments, details, updates prices) Aug 5 (Reuters) - Gold prices edged higher on Thursday as the dollar eased from a one-week peak, though gains were kept in check after hawkish comments from a key Federal Reserve official raised early tapering bets. Spot gold was up 0.1% at $1,813.14 per ounce by 1143 GMT, while U.S. gold futures gained 0.2% to $1,817.30. The U.S. dollar index was 0.2% lower after hitting a one-week high earlier in the session, making gold less expensive for other currency holders. Gold prices jumped more than 1% on Wednesday helped by weaker than expected ADP jobs data in the United States, However, bullion pared most of the gains after strong U.S. services industry activity data and hawkish remarks from Fed Vice Chair Richard Clarida on interest rates. Independent analyst Ross Norman said the mood is lacklustre towards gold, with the market seemingly unable to generate much momentum after Clarida’s comments. Higher interest rates raise the opportunity cost of holding non-interest bearing gold. Clarida also suggested the central bank could start cutting back on its asset purchase programme later this year. “The comments coming from various Fed officials give the impression that the balance of power is falling in favour of the hawks, something a strong jobs report will only accelerate,” OANDA analyst Craig Erlam said in a note. “This doesn’t bode well for gold, despite the technical picture continuing to look bullish.” Friday’s U.S. non-farm payrolls report is seen as key to the U.S. central bank’s policy stance. The Bank of England kept the size of its bond-buying programme unchanged and held its benchmark interest rate at a historic low of 0.1% on Thursday, but gave fresh clues as to how it would start weaning the economy off pandemic support. Elsewhere, silver gained 0.5% to $25.47 per ounce. Platinum fell 0.5% to $1,020.30 and palladium rose 0.4% to $2,656.36. (Reporting by Arundhati Sarkar and Brijesh Patel in Bengaluru Editing by Jane Merriman , Kirsten Donovan) Our Standards: The Thomson Reuters Trust Principles.

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