Gold futures were holding on to small gains Thursday, getting a lift after dovish remarks by Federal Reserve Chairman Jerome Powell put some pressure on Treasury yields and the U.S. dollar.
Gold for June delivery
was up $6, or 0.3%, to $1,779.90 an ounce on Comex. May silver
was up 35 cents, or 1.3%, at $26.435 an ounce.
Powell reiterated that policy makers weren’t yet ready to think about winding down extraordinary monetary stimulus, while dismissing signs of rising inflation as transitory. That put pressure on Treasury yields and the U.S. dollar, with the slide in the dollar in particular lending support to gold.
But gains for gold were trimmed as yields pushed back to the upside, with the 10-year rate
up 4 basis points at 1.663%. Higher yields raise the opportunity cost of holding nonyielding assets like gold.
“Once again, [Powell] described the rise in inflation as temporary. The U.S. dollar and bond yields fell accordingly, allowing gold to gain. That said, bond yields are now rising again, which has caused gold to drop to $1,780,” said Carsten Fritsch, analyst at Commerzbank, in a note.
Global gold demand in the first quarter dropped from a year ago on the back of a more than 70% year-over-year decline in gold investments, according to a report from the World Gold Council released Thursday. The WGC said total world gold demand for the quarter was at 815.7 metric tons, down 23% compared with the first quarter of 2020, though it was “on a par” with the fourth quarter of 2020.