Gold falls as rising expectations of reduced Fed stimulus boost dollar

Gold prices fell on Monday against a firmer dollar on expectations that the Federal Reserve will not delay its plans to reduce economic support despite the disappointing September employment report in the United States.

At 1229 GMT, spot gold was down 0.1% at $ 1,754.89 an ounce, while US gold futures were little changed at $ 1,757.70. Silver was down 0.5% to $ 22.55.

The bullion climbed on Friday to highs since Sept. 22 following the US nonfarm payroll report. However, the rise eased as investors accepted the possibility that the Fed still has enough arguments to begin removing stimulus.

Gold is experiencing some “downward pressure” after failing to hold on to Friday’s gains, said Carlo Alberto De Casa, an analyst at Kinesis Money.

However, “a good part of the reduction is already incorporated in the calculations” and as long as the bullion remains above US $ 1,750 it is positive for the metal, which limits the “great volatility”, added the analyst.

Gold is considered a hedge against inflation and currency devaluation, but higher interest rates in the United States raise the opportunity cost of owning bullion. Interest in the yellow metal was also contained by the rise in the dollar.

In other precious metals, palladium was up 2.9% at $ 2,138.16 per ounce, after hitting $ 2,182.67, its highest since Sept. 10. Platinum was up 0.5% at $ 1,031.49.