PRECIOUS-Gold falls as dollar benefits from subdued risk appetite

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(iterates, adds comments and updates prices)

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*Global shares stabilize near lower levels on concerns of oil boom

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* Gold likely to fall ahead of US jobs data – Analyst

Oct 5 (Businesshala) – Gold prices tumbled on Tuesday as the dollar strengthened as some investors sought refuge from a broad sell-off in equities driven by concerns over economic activity being hit by rising energy prices.

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Spot gold fell 0.7% to $1,757.10 an ounce, down by 1001 GMT. US gold futures were down 0.6% at $1,757.70.

The dollar index supported fears that rising oil prices would add to current inflationary pressures.

Although gold is regarded as a hedge against inflation and geopolitical uncertainties, it also competes as a safe haven with the dollar, a strong US currency also making bullion less attractive to foreign buyers.

“This is another disappointing trading day for the gold market,” said the Saxo Bank analyst, focusing on general short-term developments such as the dollar and US Treasury yields, “ignoring an unfolding energy crisis, Said Saxo Bank analyst Ole Hansen.

Besides inflation, weak US-China trade ties, China Evergrande’s debt crisis and the impasse on US debt limits also dampened the risk appetite for equities.

While gold could still move higher, a significant move would require a break above technical resistance, particularly the 21-day moving average, Hansen said.

Investors were also focused on US non-farm payrolls data on Friday, which was expected to show a continued recovery in the labor market, which could allow the US Federal Reserve to ease its monetary stimulus before the end of the year.

Lower incentives and higher interest rates raise bond yields, putting pressure on gold as it translates into an increased opportunity cost of holding non-interest bearing bullion.

Jeffrey Haley, senior market analyst for Asia-Pacific at OANDA, said gold could see choppy trading in the $1,750-$1,785.00 range ahead of the jobs report.

Haley said it could find support on a downside correction to $1,750.00 due to rising inflation and US fiscal fears.

Spot silver fell 0.4% to $22.56 an ounce, platinum fell 1.1% to $956.18, while palladium rose 0.2% to $1,908.98. (Reporting by Arundhati Sarkar and Arpan Varghese in Bengaluru. Editing by Jane Merriman)


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