2021.11.3018:09:00UTC+00Gold Futures Pare Gains, Settle Lower As Powell Hints At Policy Tightening

Gold futures pared early gains and settled lower on Tuesday as the dollar pared some losses after Federal Reserve Chairman Jerome Powell indicated the central bank could hasten a tightening of monetary policy.

Powell told the Senate Committee that he thinks reducing the pace of monthly bond buys can move more quickly than the $15 billion a month schedule announced earlier this month.

Gold prices moved higher earlier in the day as equities tumbled amid rising concerns about the new variant of the coronavirus after Moderna CEO Stephane Bancel expressed apprehensions about the effectiveness of existing vaccines against the newly identified Omicron variant.

The dollar index, which had drifted down to 95.52, briefly emerged above the flat line, rising to 96.64 before retreating into negative territory. The dollar index is currently hovering around 96.10, down 0.24 points or 0.25% from the previous close.

Gold futures for February ended down by $8.70 or about 0.5% at $1,776.50 an ounce, after having climbed to $1,811.40 an ounce around mid-morning.

Silver futures for March ended lower by $0.037 at $22.815 an ounce, while Copper futures for March settled at $4.2800 per pound, down $0.0610 from the previous close.

Powell's comments suggesting accelerated tapering comes as he told the Senate Banking Committee the recent surge in new Covid-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation.

"Greater concerns about the virus could reduce people's willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions," Powell said.

The potential for the intensification in supply-chain disruptions comes as Powell noted pandemic-related supply and demand imbalances have already contributed to notable price increases in some areas.

MNI Indicators released a report today that showed a slowdown in the pace of growth in Chicago-area business activity in the month of November.

The report said the Chicago business barometer slid to 61.8 in November from 68.4 in October, although a reading above 50 still indicates growth. Economists had expected the business barometer to edge down to 67.0.

Meanwhile, the Conference Board's report showed consumer confidence deteriorated in the month of November. The Conference Board said its consumer confidence index fell to 109.5 in November from a downwardly revised 111.6 in October. Economists had expected the index to dip to 110.7 from the 113.8 originally reported for the previous month.