Gold set to post monthly decline on stronger dollar

Gold prices were steady on Friday as investors waited for developments around a US stimulus package, though the metal was on course to post a weekly and monthly decline hurt by a stronger dollar.

Spot gold was unchanged at $1,840.91/oz at 0.58am GMT. Prices were down 0.6% for the week and 2.9% for the month. US gold futures rose 0.1% to $1,839.70/oz.

The dollar rose 0.2%, making gold expensive for holders of other currencies. The greenback has risen 0.8% for the month helped by higher US Treasury yields. Higher yields on bonds make gold a less attractive investment because it pays no interest. 

US jobless claims fell in the latest week, while fourth-quarter GDP figures met expectations.  The IMF urged that fiscal support should stay in place until an economic recovery is firmly under way even as global debt likely reached 98% at the end of 2020. A $1.9-trillion US coronavirus stimulus deal proposed by President Joe Biden is yet to be passed. 

Global demand for gold fell to its lowest in 11 years in 2020, while India’s consumption fell to its lowest in 26 years, the World Gold Council said on Thursday.  Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.4% on Thursday.

Silver dropped 0.7% to $26.18/oz, having risen 4.5% on Thursday, after some traders moved to cover short positions on rumours about a GameStop-style squeeze driven by retail investors.

Reuters