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Metals Stocks: Gold prices slip, but hold above $1,800

Gold futures were seeing a modest pull back on Wednesday, retreating from the highest settlement in about two weeks.

However, commodity analysts say that softness in the U.S. dollar and weakness in yields for government debt are likely helping to limit losses for bullion.

December gold 
GC00,
-0.18%

GCZ21,
-0.18%

was trading $3.50, or 0.2%, lower at $1,803.60, after the yellow metal marked the highest finish for a most-active contract since Sept. 3, FactSet data showed.

On Tuesday, U.S. inflation data proved a support for prices of precious metals. The consumer-price index climbed another 0.3% in August, compared with a rise of 0.5% in July, the government said Tuesday.

Still, investors are awaiting a bigger catalyst in the form of the Federal Reserve’s September meeting next week which may set the tone for monetary policy in the coming months as it plans a tapering of its monthly bond purchases.

“Indeed, investors are waiting for more clarity from the Fed about the timing of the tapering. But, this will probably not arrive in the September meeting, increasing chances of keeping bonds in the current limbo, waiting for a clear directionality,” wrote Carlo Alberto De Casa, analyst at Kinesis Money, in a daily research note.

The U.S. dollar index was off 0.1% at 92.50, as gauged by the ICE U.S. Dollar Index
DXY,
-0.16%
,
a measure of the world’s reserve currency against a half-dozen others. Meanwhile, benchmark 10-year Treasury note yields
TMUBMUSD10Y,
1.274%

are at around 1.27%. A weaker dollar and lower yields can support buying in bullion which doesn’t offer a yield among investors from overseas.

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