Gold prices inched lower on Monday as the dollar firmed up after China's central bank eased its domestic policy to support the economy. Spot gold was down 0.2 per cent at $1,200.31 an ounce at 0103 GMT. It had gained 0.9 per cent last week. US gold futures fell 0.1 per cent to $1,204.40 an ounce.
The dollar was up 0.1 per cent against a basket of six major currencies. China's central bank had on Sunday announced a steep cut in the level of cash that banks must hold as reserves, stepping up moves to lower financing costs and spur growth amid concerns over the economic drag from an escalating trade dispute with the United States.
US job growth slowed sharply in September as Hurricane Florence depressed restaurant and retail payrolls, but the unemployment rate fell to near a 49-year low of 3.7 per cent, pointing to a further tightening in labour market conditions.
US Treasury yields
The US Treasuries market had tumbled for a third straight day on Friday with the 10-year yield hitting a seven-year high, as a solid payrolls report fuelled jitters about rising inflation and more interest rate hikes. Federal Reserve Bank of New York President John Williams had on Friday endorsed the idea that the Fed will raise rates once more this year and three times next year.
A bond market rout that drove yields through key levels has some investors prepared for another leg that may finally declare an end to a three-decade-long bull run.
Italy budget deficit
The European Commission has told Italy it is concerned at its budget deficit plans for the next three years since they breach what the EU asked the country to do in July, but Rome had insisted on Saturday it would “not retreat” from its spending plans.
North Korean leader Kim Jong Un described had his talks with the US Secretary of State, Mike Pompeo, on Sunday as “productive and wonderful,” state media KCNA said on Monday, striking a positive tone compared with a previous state media stance when talks were stalled.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.20 per cent to 23,475,548.77 ounces. Speculators cut their net short position in COMEX gold by 4,186 contracts to 73,128 in week to October 2.
Higher domestic prices dented demand for physical gold in India, prompting dealers to offer the biggest discounts in 3-1/2 months last week, while neighbouring Bangladesh approved its first policy to regulate imports and exports of the metal.