Gold edges up from seven week low as yields retreat

Bloomberg

Gold edged up from the lowest in almost seven weeks as Treasury yields eased following dovish commentary from Federal Reserve Chair Jerome Powell.
The benchmark 10-year US yield declined after touching the highest since June on Tuesday, boosting appeal of non-interest bearing bullion. The dollar steadied at near the highest since November.
During a Senate Banking Committee hearing, Powell maintained that the current high level of inflation in the US should be expected to dissipate when supply chain issues are resolved, adding that the economy was still far from full employment. The comments reassured investors that rate hikes were still a long way off.
Still, Fed Bank of St. Louis President James Bullard said he sees “upside risks” to inflation and the central bank should be prepared in case price pressures persist for longer than expected. Earlier this week, Fed Governor Lael Brainard and New York Fed President John Williams both said it may soon
be time to scale back asset purchases.
Gold is heading for its biggest monthly loss since June as more central banks start signaling a pullback in stimulus measures used to cushion the economic impact of the pandemic. Last week, Powell said the Fed could begin scaling back asset purchases in November and complete the process by mid-2022. The Bank of England has left the prospect of a 2021 rate hike open, while Norway’s central bank began tightening policy last week.
“With the threat of inflation creeping in faster than expected, central banks like the Fed would most likely begin tapering its bond purchases before tweaking rates,” said Avtar Sandu, senior manager for commodities at Phillip Futures Pte. “Although gold has lost much of its appeal for investors in 2021 as compared to 2020 and the technical picture has deteriorated in favor of the bears rather than bulls, deep corrections of prices are still viewed as buying opportunities.”
Spot gold rises 0.3% to $1,739.33 an ounce at 9:11 am in London, after dropping as low as $1,728.18 on Tuesday, the lowest since August 11. Silver slipped, while palladium and platinum advanced. The Bloomberg Dollar Spot Index steadied after climbing as much as 0.5%.