Gold Holds Decline After Fed Minutes as Dollar, Yields in Focus

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(Bloomberg) — Gold steadied, tracking movements in the dollar and bond yields, with investors weighing the latest insights into the Federal Reserve’s stance on monetary policy and inflation risks.

Minutes from the Fed’s March 16-17 meeting released Wednesday showed officials were united on the need to see more progress on the recovery before scaling back their massive bond-buying program. They also indicated any spikes in inflation — which could be a driver for bullion — are likely to be transitory. Traders will look for further comments from Chair Jerome Powell, who is due to take part in a panel about the global economy on Thursday.

“We expect the Fed to remain accommodative even if inflation rises above their target for some time,” said John Feeney, business development manager at Sydney-based bullion dealer Guardian Gold Australia. “The key for gold will be how much inflation overshoots a desirable level and what effect that has on real yields.”

Bullion has dropped more than 8% this year amid optimism over the global recovery and as rising bond yields damped the appeal of the precious metal, which doesn’t earn interest. Holdings in exchange-traded funds, one of the main pillars behind gold prices hitting a record in 2020, continue to decline, signaling waning investor interest.

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Spot gold added 0.1% to $1,739.65 an ounce at 12:41 p.m. in Singapore, after dropping 0.3% on Wednesday. Silver and palladium fell, while platinum advanced. The Bloomberg Dollar Spot Index slipped 0.1% after rising 0.2% on Wednesday.

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