NEW YORK: Gold edged up on Tuesday, pausing its steep sell-off on some lingering doubts over the economic impact of the new Delta COVID-19 variant, though a rally in the dollar and bond yields continued to grip the market.
Spot gold rose 0.1% to $1,730.93 per ounce by 1:37 p.m. EDT (1737 GMT), while US gold futures settled up 0.3% at $1,731.70.
The precious metal slid as much as 4.4% on Monday, as expectations the US Federal Reserve could begin tempering its economic support sooner than previously anticipated were solidified by a strong US jobs report on Friday.
Though the metal has somewhat recovered from Monday's lows, it remains pressured by a strengthened US dollar and 10-year benchmark Treasury yields on the back of Fed tapering bets.
"Gold will be under pressure in the next couple of months," said Bart Melek, head of commodity strategies at TD Securities, noting that a continued uptick in real yields along with expectations of Fed tapering would weigh on gold. Higher returns on Treasury bonds increase the opportunity cost of holding gold, which pays no interest.
"The market's expectation is that economic data will continue to recover in a very firm clip reminiscent of the employment data, but Delta variant concerns could certainly prevent the Fed from wanting to taper sooner rather than later," Melek added.
Delta variant coronavirus cases in several Asian countries and the United States have continued to surge, threatening the economic outlook.
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