Make Kitco Your Homepage

Gold steadies as investors prepare for Fed taper timeline

Kitco News

Dec 13 (Reuters) - Gold steadied on Monday as the market focus pivoted to this week's Federal Reserve meeting to learn how quickly it plans to unwind economic support measures introduced in response to the coronavirus pandemic.

Spot gold was last up 0.3% at $1,787.61 per ounce as of 1205 GMT. U.S. gold futures gained 0.2% to $1,788.50.

Prices rose as much as 0.8% on Friday following data showing U.S. consumer prices rose further in November, leading to the largest annual gain since 1982. read more

"In the short- to medium-term, gold's not going to be going anywhere until we get an idea of how much the Fed accelerates tapering and whether or not they are particularly hawkish in their statement, which could help yields and pressure gold," said Michael Hewson, chief market analyst at CMC Markets UK.

Although gold is considered an inflation hedge, reduced stimulus and interest rate increases tend to push government bond yields up, raising the opportunity cost of bullion, which pays no interest.

But with the market pricing in the Fed moving forward into a rate rise cycle, it is sufficient for gold to be counted as a defensive asset right now, said Stephen Innes, managing partner at SPI Asset Management.

"And that's why it's continuing to hold the bid," he said.

The Fed is likely to announce a faster tapering of bond purchases but more pronounced concerns over inflation or an aggressive "dot plot" could roil markets.

Also preventing a breakout in gold from the $1,760-$1,795 per ounce level it has been hemmed in for most of December, risk appetite stabilised, and the dollar (.DXY) edged higher.

A stronger dollar makes bullion more expensive for those holding other currencies, dimming its appeal.

Spot silver was up 0.2% at $22.20 per ounce, platinum fell 0.3% to $939.50, and palladium was down 0.6% at $1,750.69.

Reporting by Bharat Govind Gautam and Asha Sistla in Bengaluru; Editing by Robert Birsel and Louise Heavens
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.