Gold steadies as bleak US jobs data boosts hopes for more fiscal stimulus

Bengaluru — Gold prices steadied on Monday as grim US jobs data bolstered hopes for more fiscal stimulus, though optimism about coronavirus vaccine rollouts kept gains in check.

Spot gold prices were steady at $1,837.04 per ounce by 5.20am, while US gold futures were little changed at $1,840.80.

“Softer jobs growth and tighter social mobility restrictions ostensibly lower the hurdle for a policy response from [the US] Congress,” said Stephen Innes, chief global market strategist at financial services firm Axi.

Data on Friday showed the US economy added the fewest workers in six months in November.

Talks aimed at reaching a fresh pandemic relief package gathered momentum on Friday, as a bipartisan group of US legislators worked to put the finishing touches on a new $908bn bill. While the gold market might be disappointed with the size of the stimulus package, markets are likely to take support from the bipartisan nature of the deal that suggests further compromise in the US Congress ahead, Innes said.

Gold tends to benefit from stimulus measures as it raises the prospect of inflation, against which bullion is used as a hedge.

Raising geopolitical uncertainty, the US is preparing to impose sanctions on at least a dozen Chinese officials, according to sources familiar with the matter. However, gold’s gains were capped as Britain prepared to become the first country to roll out the Pfizer/BioNTech Covid-19 vaccine this week.

Though the vaccine news is perceived to be bearish for gold, it will not stop governments from pursuing easier monetary and fiscal policies, said ED&F Man Capital Markets analyst Edward Meir in a note.

Silver fell 0.6% to $24.03/oz and platinum slipped 1.9% to $1,034.29, while palladium gained 0.3% to $2,350.49.

Reuters