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PRECIOUS-Gold extends decline on firmer dollar, pre-Jackson Hole jitters

Credit: REUTERS/SERGEI KARPUKHIN

Gold extended a retreat on Thursday as a firmer dollar and U.S. Treasury yields combined with uncertainty about the stance the Federal Reserve's could take on tapering of its economic support in its Jackson Hole, Wyoming, symposium.

By Nakul Iyer

Aug 26 (Reuters) - Gold extended a retreat on Thursday as a firmer dollar and U.S. Treasury yields combined with uncertainty about the stance the Federal Reserve's could take on tapering of its economic support in its Jackson Hole, Wyoming, symposium.

Spot gold XAU= fell 0.3% to $1,785.80 per ounce by 10 a.m. EDT (1400 GMT), after slipping as much as 1.2% and breaking below the key psychological $1,800 level on Wednesday.

U.S. gold futures GCv1 dropped 0.1% to $1,789.00.

Fed Chair Jerome Powell's speech during Friday's symposium comes on the heels of suggestions from St. Louis Federal Reserve President James Bullard that the U.S. central bank should begin tapering and end bond buying by early next year.

Those comments also added to the dollar's strength and pushed benchmark Treasury yields higher, dealing a further blow to the non-yielding bullion's appeal. USD/US/

Edward Moya, senior market analyst at OANDA, said that while the Fed was unlikely to announce tapering at the symposium, it could provide a timeline for cutting back economic support, especially with COVID-19 cases appearing to have peaked in Southern states.

"Gold is a little vulnerable because the Fed appears to be in a position where they are going to be able to provide some signals that they're getting close to scale back their asset purchases."

Gold is considered a hedge against inflation and currency debasement that tends to result from widespread money printing by central banks. An interest rate hike by the Fed would dull bullion's appeal compared with interest-earning assets.

But, "any signs that the Fed could be more patient amid the ongoing pandemic should see gold prices well supported," ANZ Research said in a note.

Elsewhere, silver XAG= fell 1% to $23.62 an ounce, platinum XPT= shed 0.9% to $987.56, and palladium XPD= slipped 1.8% to $2,386.84.

(Reporting by Nakul Iyer in Bengaluru; editing by Jonathan Oatis)

((nakul.iyer@thomsonreuters.com; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 0417; Reuters Messaging: nakul.iyer.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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