Gold declines as tapering remains in focus

Gold futures traded modestly lower on Monday, as a pickup in Treasury yields and the US dollar helped to dull appetite for the precious metal, which has been held in check by uncertainties about the spread of omicron and Federal Reserve policies.

The most active February delivery gold contract GCG22, -0.16% GC00, -0.16% was off $4.60, or 0.3%, at $1,779.30 an ounce, following a weekly decline of 0.1% for the most-active contract, according to Dow Jones Market Data.

Gold rose to end last week as a weaker-than-expected jobs report was seen as unlikely to derail the Fed’s plan to reduce, monthly, market-supportive purchases of Treasury yields and mortgage-backed securities, with the report leading a flight to assets perceived as safe.

Investors believe that the Federal Reserve is still sticking to its plan to speed up tapering, which would mean a quicker rise in interest rates.

A surge in interest rates increases the opportunity cost of holding the precious metal and decreases its appeal.