Gold futures settled higher on Tuesday, extending their gain from a day earlier when prices got a boost from a weaker U.S. dollar to post their first finish above the key $1,800-an-ounce mark for the first time in nearly three weeks.

Investors are waiting for the the annual Jackson Hole central bankers monetary-policy symposium where Federal Reserve Chairman Jerome Powell on Friday may indicate that the central bank will slow monthly purchases of Treasurys and mortgage-backed securities that had helped to prop up financial markets during the worst of pandemic in the spring of 2020.

“Powell has a tough job to do — maybe tougher than any Fed chairman in the last 20 years,” said Adam Koos, president at Libertas Wealth Management Group.  

Federal Reserve Chairman Jerome Powell “has a tough job to do — maybe tougher than any Fed chairman in the last 20 years.”

— Adam Koos, Libertas Wealth Management

“The biggest problems would occur if he tapers too fast,” he told MarketWatch.  “This market is fragile, and gold investors know that.”

“But if we start to see a market reaction to Fed policy that includes rising rates and a rising dollar, yellow metal is going to struggle” to maintain gains or find traction, said Koos.

December gold

rose $2.20, or 0.1%, to settle at $1,808.50 an ounce, following a more than 1% gain for bullion on Monday. Prices posted their second finish in a row above $1,800, at the highest settlement for a most-active contract since Aug. 5, FactSet data show.

Investors in gold have been attuned to trading in the dollar, which is virtually unchanged on Tuesday, as measured by the ICE U.S. Dollar Index
after falling 0.6% on Monday, paving the way for gains in dollar-priced precious metals. The index was little changed Tuesday.

“Gold has caught a tailwind amid rising concerns about the delta variant, which is pushing back market expectations as to when the Fed’s taper might commence,” wrote Peter Grant in Zaner’s latest Grant on Gold newsletter. “For the same reason, the dollar has come off its highs, providing an additional boost for gold.”

A weaker dollar can make assets priced in the currency, like gold, appear more attractive to overseas buyers.

Longer term, “investors are also waiting to see whether or not inflation’s claws will grab hold of the economic environment we’re living in — or if those same claws will slip back into the 2%-3% inflation we’ve been used to” this past three or more decades, said Koos.

Elsewhere in metals, silver for September delivery

tacked on 24 cents, or 1%, to $23.89 an ounce, after surging 2.4% on Monday.

September copper

rose 0.5% to $4.26 a pound. October platinum

fell 0.4% to $1,010 .10 an ounce, but September palladium

added 2.4% to $2,442.50 an ounce.

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