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Gold futures on Tuesday headed modestly higher, as the precious metal attempted to halt a succession of declines at three, amid subdued moves in the dollar and steady Treasury yields.
Strategists say that fears of increasing pricing pressures has unsettled global markets and provided some support for bullion.
At the same time, however, concerns about inflation, as the global economy tries to claw back from the aftershocks of the COVID-19 pandemic, has complicated the outlook for precious metals because an overheated economy may force central bankers to dial up interest rates sooner, a negative for gold and silver prices.
“Rising inflation, due in part to the increasing energy prices, is also making the marketplace uneasy. U.S. inflation reports are due out Wednesday and Thursday mornings and will be closely scrutinized,” wrote Jim Wyckoff, senior analyst at Kitco.com in a daily research note.
Investors are looking for a reading of consumer prices, the consumer-price index, due to be released on Wednesday, and prices for wholesalers, the producer-price index, due on Thursday.
Wyckoff also pointed to concerns about a possible spillover effect from beleaguered Chinese property developer Evergrande, which has reportedly missed another round of debt payments.
Against that backdrop, December gold
GCZ21,
GC00,
was trading $5, or 0.3%, higher at $1,760.70 an ounce, following a 0.1% decline on Monday, which marked its third consecutive decline. Silver for December delivery
SIZ21,
SI00,
however, was down 9 cents, or 0.4%, at $22.57 an ounce, after a 0.2% decline a day ago.
The 10-year Treasury note
TMUBMUSD10Y,
was yielding around 1.60%, little changed from 1.604% on Friday. The Treasury market was closed on Monday in observance of Columbus Day, even as other markets were open. Meanwhile, the dollar was holding steady at around 94.30, as measured by the ICE U.S. Dollar Index
DXY,
A pause in the rise of yields and the dollar can pave the way for higher moves in precious metals which are priced in dollars and don’t offer a coupon.
