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Gold futures on Wednesday were little changed, moving in step with the U.S. dollar, which saw a slight move higher as investors turned their attention to incoming U.S. President Joe Biden and the end of the Trump administration.
At last check, the dollar was percolating higher, trying to rise Wednesday after a dip to start the holiday-shortened week on Tuesday.
Some dealers attributed a slight bounce in dollars, which was helping to weigh on gold, to testimony from Janet Yellen before the Senate Finance Committee in her confirmation hearing Tuesday as U.S. Treasury Secretary. Yellen said the U.S. “does not seek a weaker currency to gain competitive advantage,” as the Biden administration attempts to extricate the country from a virus-induced recession.
February gold GC00, +0.35% GCH21, +0.39% edged $1, or less than 0.1%, higher to trade at $1,841.10 an ounce. On Tuesday, gold settled 0.6% higher.
Elsewhere in metals, silver for March delivery SI00, +0.14% SIH21, +0.14% shed 4 cents, or 0.2%, lower at $25.28 an ounce, after a 1.8% rally on Tuesday.
The dollar was up nearly flat but in positive territory at 90.533, as measured by the ICE U.S. Dollar Index DXY, +0.05%. Shifts in the currency can influence trading in dollar-pegged commodities like gold as it factors into the cost benefit of trading in bullion for overseas buyers.
Bullish gold investors make the case that accommodative central banks across the globe and Biden’s legislative agenda, highlighted by an ambitious $1.9 trillion coronavirus relief proposal, will ultimately provide support for gold and weaken the greenback.
The European Central Bank on Thursday is expected to emphasize its intention to maintain easy-money policies as the viral outbreak continues to hobble the eurozone economy and cause fresh lockdowns.
“Investors are also expecting the ECB to signal its intention at its policy meeting this week to keep the current expansive monetary policy stance for a long time to come to support the Eurozone recovery,” wrote Fawad Razaqzada, market analyst at ThinkMarkets.
