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Metals Stocks: Gold prices slide as bond yields and the dollar firm

Metals Stocks

Commodity investors await Powell’s Jackson Hole speech

AFP/Getty Images

Gold futures on Wednesday edged slightly lower, hovering around the unchanged mark, as a rise in bond yields and the U.S. dollar, both bearish factors for bullion, weighed on precious metals.

The moves come ahead of a highly anticipate speech from Federal Reserve Chairman Jerome Powell, who is expected to provide a more accommodative signal, signaling that the U.S. central bank is willing to embark upon on unconventional way of thinking about rising inflation.

Powell is expected to advocate for a so-called asymmetric inflation target, one that allows policy makers to let inflation rise above their traditional annual target of 2%, which could be seen as bullish for gold and other precious metals.

Read:Powell may be the headliner, but here are the other key central bankers set to speak at Jackson Hole

The Fed Chairman is expected to conduct a webcast speech at around 9 a.m. Eastern Time on Thursday at the Jackson Hole symposium, which is being held virtually due to the pandemic.

“Consequently, I am expecting dovish rhetoric from Jay Powell and other central bank heads at the Jackson Hole summit,” wrote Fawad Razaqzada, market analyst, at ThinkMarkets in a research note on Wednesday.

“IF I am correct, then yields and the dollar should resume lower, which in turn will likely support gold and silver,” he wrote.

December gold


was off $6, or 0.3%, at $1,916.10 an ounce, after declining 0.8% on Tuesday to market the lowest settlement for a most-active contract since July 24, according to FactSet data.

Trading in the precious metal comes against the backdrop of government bond yields that were rising, as prices fall, with the 10-year Treasury note

rate up 3.5 basis points at 0.71%, according to FactSet data. The dollar also showed signs of firming, rising 0.3% at 93.250, as gauged by the ICE U.S. Dollar Index
A rise in yields can increase the relative cost of owning gold, which doesn’t offer a coupon, over so-called risk-free Treasurys and a stronger buck can make dollar-priced bullion more expensive to overseas buyers.

Read:U.S. bond fund giant says gold still has plenty of luster

Meanwhile, September silver

added 9 cents, or 0.3%, at $26.230 an ounce, following a 1.3% decline in the prior session.

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