Gold futures inched higher Tuesday, a day after the precious metal closed at its loftiest level in nearly three weeks, supported by weakness in the U.S. dollar.
Investors are waiting for the the annual Jackson Hole central bankers monetary-policy symposium where Federal Reserve Chairman Jerome Powell on Friday may indicate that the central bank will slow monthly purchases of Treasurys and mortgage-backed securities that had helped to prop up financial markets during the worst of pandemic in the spring of 2020.
“Powell has a tough job to do — maybe tougher than any Fed chairman in the last 20 years,” said Adam Koos, president at Libertas Wealth Management Group.
Federal Reserve Chairman Jerome Powell “has a tough job to do — maybe tougher than any Fed chairman in the last 20 years.” — Adam Koos, Libertas Wealth Management
“The biggest problems would occur if he tapers too fast,” he told MarketWatch. “This market is fragile, and gold investors know that.”
“But if we start to see a market reaction to Fed policy that includes rising rates and a rising dollar, yellow metal is going to struggle” to maintain gains or find traction, said Koos.
December gold rose $3.20, or 0.2%, at $1,809.50 an ounce, following a more than 1% gain for bullion on Monday, which took the precious metal to its highest settlement since Aug. 5.
Investors in gold have been attuned to trading in the dollar, which is virtually unchanged on Tuesday, as measured by the ICE U.S. Dollar Index, after falling 0.6% on Monday, paving the way for gains in dollar-priced precious metals.
A weaker dollar can make assets priced in the currency, like gold, appear more attractive to overseas buyers.
Longer term, “investors are also waiting to see whether or not inflation’s claws will grab hold of the economic environment we’re living in — or if those same claws will slip back into the 2%-3% inflation we’ve been used to” this past three or more decades, said Koos.
Elsewhere in metals, silver for September delivery tacked on 18.4 cents, or 0.8%, to $23.84 an ounce, after surging 2.4% on Monday.
September copper rose 1.1% to $4.28 a pound. October platinum fell by nearly 0.2% to $1,013 .30 an ounce, but September palladium added 3.1% to $2,458.50 an ounce.
Source: Marketwatch