Gold futures were edging higher Wednesday morning, partially supported by subdued yields for government debt and a U.S. dollar that has receded from roughly 2-month highs.

On Wednesday, August gold
GCQ21,
+0.48%

was up $4.70, or 0.3%, at $1,781.90 an ounce, following a 0.3% fall on Tuesday.

However, the outlook for bullion remains uncertain after a sharp selloff last week and as investors wrestled with the Federal Reserve’s view on inflation and the projections for the labor-market rebound from the COVID pandemic.

Yields for the 10-year Treasury note
TMUBMUSD10Y,
1.488%

were at 1.47% on Wednesday and a gauge of the U.S. dollar, the ICE U.S. Dollar Index
DXY,
-0.16%
,
was down 0.2%.

Fawad Razaqzada, market analyst at ThinkMarkets, is wagering that gold may see some upside against that backdrop.

“Gold and silver have been consolidating for the past couple of days after retreating sharply last week in response to a hawkish Fed. However, with the dollar resuming lower and stocks higher, and US yields having gone back inside prior ranges, precious metals could be due a rally,” the analyst wrote.

The moves for the precious metal comes after Fed Chairman Jerome Powell on Tuesday testified before a House committee, repeating that the central bank expects rising inflationary pressures to prove transitory. The central bank chief also reiterated that policy makers would be patient in raising benchmark interest rates higher from their current range between 0% and 0.25%.

“Indeed, concerns have eased a little that faster inflation would trigger policy tightening,” Razaqzada said. “Jerome Powell said the Fed would be patient in waiting to lift interest rates, and once again reiterated inflationary pressures will likely wane,” the analyst added.

Meanwhile, July silver
SIN21,
+0.92%

was trading 10 cents, or 0.4%, higher at $1,781.80 an ounce, after declining 0.7% on Tuesday.

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