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A gloved hand stacks bars of gold into a pyramid.
Leonhard Foeger | Reuters
Gold was flat on Monday, hovering near a three-week low, as traders awaited December U.S. inflation data that could reinforce the case for earlier-than-expected interest rate hikes by the U.S. Federal Reserve after weaker jobs data.
U.S. Treasury yields surged last week, following the minutes of Fed policy meeting, which suggested an earlier-than-expected rate hike and the possibility that the Fed may reduce its balance sheet sooner than many have anticipated.
Gold is considered a hedge against higher inflation, but the metal is highly sensitive to rising U.S. interest rates which increase the opportunity cost of holding non-yielding bullion.
Fed funds futures have priced an almost 90% chance of a rate hike in March and a more than 90% chance of another one by June.
U.S. December core CPI was expected to have risen 5.4% annually after climbing 4.9% in November.
U.S. nonfarm payrolls rose by 199,000 jobs last month amid worker shortages, lower than a forecast of 400,000, with moderate job gains expected in the near term as spiraling Covid-19 infections disrupt economic activity.
An uptick in retail appetite for physical gold prompted dealers in India to charge premiums last week, while upcoming Lunar New Year festivities brightened the outlook for sales in Singapore.
U.S.-Russia talks over rising tension in Ukraine also have traders on the edge, as the two sides seem far apart and failure risks an armed confrontation on Europe’s doorstep.
Spot silver was flat at $22.29 an ounce, platinum rose 0.1% to $956.10, and palladium shed 0.3% to $1,927.25.