Gold Futures Settle Lower On Higher Bond Yields, Steady Dollar

Higher bond yields and a fairly solid dollar weighed on the yellow metal’s safe-haven appeal on Wednesday. Uncertainty about the outlook for Federal Reserve’s interest-rate path weighed as well on gold.

The dollar climbed higher in the Asian session, lifted by somewhat hawkish comments from a few Fed officials. Fed Governor Christopher Waller said in a speech on Tuesday that Q3 U.S. GDP growth was a “blowout” performance that warrants a very close eye when thinking about policy going forward.

Fellow Governor Michelle Bowman said that the economy is gaining speed and requires a higher Fed policy rate.

Both Federal Reserve Bank of Minneapolis President Neel Kashkari and Chicago Fed President Austan Goolsbee also refused to rule out rate cuts, citing sticky inflation and resilience in the U.S. economy.

However, the dollar pared gains later on as Federal Reserve’s Chair Jerome Powell’s much awaited speech did not provide any clues about the central bank’s interest-rate path.

Powell refrained from specifically addressing monetary policy and focused his remarks on praise for the work by the Fed’s Division of Research and Statistics.

The dollar index, which surged to 105.87 in early New York session, dropped to 105.45 around noon, recording a marginal loss.

Gold futures for December ended lower by $15.70 at $1,957.80 an ounce.

Silver futures for December ended up $0.139 at $22.728 an ounce, while Copper futures for December settled at $3.6380 per pound, down $0.0410 from the previous close.

“The yellow metal is struggling against a rebound in shorter-term US yields following sharp falls last week. In the absence of new data, we may simply be seeing a correction as policymakers continue to push back,” says Craig Erlam, Senior Market Analyst at OANDA, UK & EMEA.

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