Gold Rally Cools As Traders Look Past Jobs Miss to Looming Fed Taper

* U.S. job growth slows sharply in September

* Platinum sees best week since June 25

* Palladium snaps four straight weeks of decline (Updates prices)

Oct 8 (Reuters) – Gold pared gains on Friday after rising more than 1% on U.S. jobs data miss, as investors came to terms with the possibility the Federal Reserve could still have enough fodder to wean the economy off stimulus this year.

Spot gold was up 0.2% at $1,758.86 per ounce by 1:47 p.m. EDT (1747 GMT) after hitting $1,781.20, its highest level since Sept. 22.

U.S. gold futures settled down 0.1% at $1,757.4.

U.S. employers added just 194,000 jobs in September, well below expectations. But upward revisions to prior months’ data mean the economy has now made up for half of the jobs deficit it faced in December.

Gold gained sharply as the data at first appeared to be downbeat, but internals of the report seemed “overall to be not so bad,” said Jim Wyckoff, senior analyst at Kitco Metals.

This drove expectations that the Fed will “continue on its path of wanting to taper monetary policy sooner, rather than later,” leading to the retreat in gold, although yet another poor jobs report next month could change that, Wyckoff added.

Gold was also caught between headwinds from higher U.S. Treasury yields, and some support from a slightly weaker dollar.

The gold market now seems to expect a tapering announcement at some point this year, said Standard Chartered analyst Suki Cooper.

“However, the downside appears well-supported, given the demand response from the physical market.”

Reduced stimulus and higher interest rates lift bond yields, translating into increased opportunity costs of holding non-yielding bullion.

“For the gold narrative to really pick up again, we’d need an impulsive rally above $1,950-60, or the pre-COVID-vaccine-highs and that would require a significant catalyst not in the market right now,” said a New-York based precious metals trader.

But autocatalysts platinum and palladium held on to gains, rising 4.1% to $1,019.74, and 5.8% to $2,073.52 respectively, likely buoyed by the positive fine print in the jobs report.

Spot silver rose 0.5% to $22.70. (Reporting by Arundhati Sarkar and Arpan Varghese in Bengaluru; Editing by Shailesh Kuber and Vinay Dwivedi)

Source: https://www.reuters.com/article/global-precious/precious-gold-rally-cools-as-traders-look-past-jobs-miss-to-looming-fed-taper-idUSL4N2R42WI