LONDON : Gold steadied yesterday after two days of losses as the dollar index retreated from the previous day's seven-week high, while traders took to the sidelines before a report on the US jobs market today. The monthly non-farm payrolls data for December is being watched for clues on the timetable for further tapering of US monetary stimulus, traders said. Weekly US jobless figures could also prompt some moves in gold. Spot gold was at $1 Â.54 (R13 254.60) an ounce yesterday, little changed from Wednesday, while US gold futures for February delivery were up 80 cents an ounce at $1 Â.30. The metal has risen 1.8 percent this month as stock markets corrected and Chinese consumers bought ahead of the Lunar New Year , but its early strength has waned, with a rebound in European stocks to 5½-year highs keeping a lid on gains. "Last year, gold was often negatively correlated with the S&P 500," Peter Fertig , a consultant with Quantitative Commodity Research , said. "At the beginning of this year, money was flowing back from stocks into gold, but as we've seen a stabilisation of the stock market, we've seen money leaving gold and going back into equities." The metal hit a one-week low after Wednesday's ADP private sector jobs report lifted expectations that the US Federal Reserve will taper its bond-buying scheme sooner rather than later after opting to cut purchases by $10 billion a month in December. "For tomorrow, I expect the labour market report will come in slightly above expectations, as has already been indicated by the ADP report," he said. "That will overall be positive for the stock market and negative for the precious metals." Minutes of the Fed's last policy meeting released on Wednesday |signalled the bank would take a cautious approach to scaling back the programme. Expectations that the scheme was coming to an end was a key factor in last year's 28 percent plunge in gold prices. The European Central Bank is also due to announce its interest rate decision today, followed by a news conference on policy. Buying of gold in China , which is tipped to have taken over from India as the world's biggest bullion consumer last year, steadied yesterday after a strong start to the week, dealers said. Premiums on the Shanghai Gold Exchange held at $17 . The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, reported its first outflow of the year yesterday, of 1.5 tons, taking its holdings to a five-year low of 793.121 tons. Last year the fund saw an outflow of more than 550 tons, the first year its holdings had fallen since its launch in 2004. Commodity exchange traded products suffered their worst year on record last year as investors dumped their gold holdings and joined the equity rally, BlackRock data showed. Bank of America Merrill Lynch said yesterday it had cut its gold price forecasts for this year by 11 percent to $1 150 an ounce, and its silver price forecasts by 21 percent to $18.38 . "While index rebalancing may support gold until January 14 , we see limited support to prices beyond that," it said. "Our continued bearish view is driven by the challenging macro-economic environment, which is best captured by rising US 10-year rates and a persistent lack of inflation pressures." - Reuters Cape Argus
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