PRECIOUS-Gold falls as faltering risk appetite lifts the dollar

  • 10/5/2021
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* Global equities steady near lows on concerns over oil surge * Gold likely to remain choppy ahead of U.S. jobs data - analyst Oct 5 (Reuters) - Gold prices eased on Tuesday, pressured by gains in the dollar after some investors sought refuge in the U.S. currency from a stock market selloff driven by concerns over soaring energy prices. Spot gold was down 0.7% at $1,756.49 per ounce by 1156 GMT. U.S. gold futures shed 0.6% to $1,757.20. The dollar index rose, supported by fears that rising oil prices would add to existing inflationary pressures. Although gold is considered a hedge against inflation and geopolitical uncertainties, as a dollar-priced asset it tends to be pressured by strength in the U.S. currency, which makes it more expensive for non-U.S. buyers. “It’s another frustrating trading day for the gold market,” focusing on the usual short-term developments such as gains in the dollar and U.S. Treasury yields, “while ignoring an unfolding energy crisis that’s driving a negative growth narrative,” said Saxo Bank analyst Ole Hansen. Apart from inflation, fragile U.S.-China trade ties, China Evergrande’s debt crisis and a stalemate over the U.S. debt ceiling also dampened risk appetite for equities. While gold could still move higher, a significant move would require a break above technical resistance, especially the 21-day moving average, Hansen said. Investors’ focus was also on U.S. nonfarm payrolls data due on Friday, expected to show continued improvement in the labour market which could allow the U.S. Federal Reserve to begin tapering its monetary stimulus before year-end. Reduced stimulus and higher interest rates lift bond yields, pressuring gold as it raises the opportunity cost of holding non-interest-bearing bullion. Gold could see choppy trading in the $1,750-$1,785.00 range ahead of the jobs report, said Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA. But it could find support on dips to $1,750.00 as inflation and U.S. fiscal fears increase, Halley added. Spot silver fell 0.7% to $22.51 per ounce, platinum dropped 1.5% to $952.51, and palladium dipped 0.2% to $1,900.84. (Reporting by Arundhati Sarkar and Arpan Varghese in Bengaluru; Editing by Jane Merriman and Jan Harvey)

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