(Bloomberg) -- Gold slipped from the highest level in more than four months as the dollar and Treasury yields edged up, with investors weighing the future of monetary policy in a post-pandemic world.
Federal Reserve Vice Chairman for Supervision Randal Quarles said on Wednesday that it will be important for the U.S. central bank to begin discussing in coming months plans to reduce its massive bond purchases if the economy continues to power ahead coming out of the pandemic. Meanwhile, New Zealand followed in the footsteps of Canada to flag a potential interest-rate increase next year as central banks begin to tip toe away from their emergency monetary settings.
Gold has erased its 2021 losses amid signs of rising inflation and a potentially uneven economic recovery as some countries grappled with a resurgence in coronavirus cases. Fed officials have pushed back against the threat that a spike in price pressures will prove lasting, while reassuring investors on the central bank’s accommodative stance.
“With the reassurances from the banks, it is likely that even if inflation is higher than expected, the central bankers are still going to be dovish,” said Avtar Sandu, a senior manager for commodities at Phillip Futures Pte. “What really matters for gold are real rates,” he said, adding that central bankers would continue to keep rates low, which would be bullish for gold.
Spot gold dropped 0.1% to $1,894.45 an ounce by 8:46 a.m. in Singapore. Prices climbed to $1,912.76 on Wednesday, the highest since Jan. 8, before paring gains. Silver, palladium and platinum all fell. The Bloomberg Dollar Spot Index ticked higher after rising 0.3% on Wednesday.
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