Gold futures hovered near unchanged Tuesday, a day after getting a boost from a weaker U.S. dollar, as investors kept an eye on prospects for additional stimulus from Washington.
Gold for December delivery was unchanged at $1,920.10 an ounce on Comex. December silver fell 17 cents, or 0.7%, to $24.39 an ounce.
The dollar, as measured by the ICE U.S. Dollar Index, fell Monday and was off 0.1% on Tuesday. A weaker dollar is seen as a positive for gold and other commodities priced in dollars, making them less expensive to users of other currencies.
A rise in Treasury yields, however, is seen as a negative. Falling yields have contributed to gold’s gains this year, reducing the opportunity cost of holding nonyielding assets like commodities.
It would likely take a big rebound for the dollar and a slide in government bond prices (which move in the opposite direction of yields) to spark a sharp gold selloff, said Fawad Razaqzada, market analyst at Think Markets, in a note — a scenario he sees as unlikely.
“Well, for yields to rise sharply, the Fed and other major central banks will have to drop their dovish views and start tightening their belts. So, it all boils down to the economy,” he said. “But right now, or in the foreseeable future, the global economy is not in a state that requires tighter monetary – and indeed fiscal – conditions.”