RTRS:PRECIOUS-Gold steadies on Fed stimulus outlook; US jobs report in focus
* Fed officials suggest bond purchases will continue for
longer
* Friday's nonfarm payroll data may decide price direction
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Nov 5 (Reuters) - Gold steadied on Tuesday after
a six-session losing streak, helped by comments from Federal
Reserve officials that suggested the U.S. central bank would
maintain its ultra-loose monetary policy for some time yet.
Spot gold was steady at $1,314.42 an ounce at 0729
GMT after hitting a session high of $1,317.96 earlier.
The metal has lost about a fifth of its value this year on
fears that the Fed would start to wind down its bullion-friendly
policy plus worries about outflows from gold-backed
exchange-traded funds.
The metal is now trading in a narrow range and investors
were refraining from taking big positions ahead of a crucial
U.S. jobs report later this week.
The Fed said last month that it would stick with its monthly
$85 billion bond purchases until the economy improved further
and budget issues in Washington were resolved, raising
expectations that the tapering would not begin until next year,
although some still believe it may start this year.
One senior central banker said on Monday the Fed should
scale back its asset purchases only when the U.S. economy shows
clearer signs of improvement and even then it should act slowly,
while two others stressed there was no need to rush.
"The Fed is less likely to cut back stimulus this year due
to the recent government shutdown and lacklustre economic data,"
said Chen Min, a precious metals analyst at Jinrui Futures in
Shenzhen.
"We hold that the Fed will start scaling back in the first
quarter of next year and therefore remain bearish on gold
prices."
A strong U.S. nonfarm payrolls report on Friday could
rekindle fears that the Fed might start "tapering" its stimulus
buying from December, which would put downward pressure on gold
prices.
Gold traders were also watching the euro on Tuesday. The
European currency reversed early gains to trade near a
seven-week low as investors were cautious ahead of a European
Central Bank policy meeting this week.
A drop in the euro makes it more expensive for holders to
buy dollar-denominated gold.
A sharp slowdown in inflation has raised the risk the ECB
may be forced to cut interest rates or at least lay the
groundwork for a move, which could depress the euro.
"Should the euro weakness resume, bullion prices may fall
back onto the defensive and test $1,300 per ounce," HSBC
analysts said in a note.
However, a fall below $1,300 could provide a boost to
physical demand, which has been subdued lately.
