Gold hovers below $2,000 mark

FE Team | Published: February 14, 2024 22:43:15

Gold prices extended declines on Wednesday, languishing below the key $2,000-per-ounce mark, pressured by a stronger-than-expected US inflation report that caused investors to pull back on bets of rate cuts by the Federal Reserve, reports Reuters.
Spot gold fell 0.1 per cent to $1,991.09 per ounce as of 1310 GMT - its lowest since Dec. 13. Bullion fell about 1.4 per cent on Tuesday, its biggest daily loss since December 4. US gold futures slipped 0.1 per cent to $2,004.40/oz.
"The dovish predictions from the last few months have vanished and investors are now pretty sure that the Fed will need to keep rates higher for a bit longer," said Carlo Alberto De Casa, market analyst at Kinesis Money.
Data on Tuesday showed US consumer prices rose more than expected in January, at a 3.1 per cent annual rise, above forecasts of a 2.9 per cent increase.
Traders now see three 25-basis-point rate cuts in 2024, down from four, in line with the Fed's "dot plot" released in December. The Fed may wait until June before cutting interest rates.
According to the CME Fed Watch Tool, traders now expect 78 per cent chance of a rate cut in June. Lower interest rates boost non-yielding bullion's appeal.
Keeping pressure on gold, the US dollar index hovered near a three-month peak, while 10-year Treasury yields were near a 2-1/2-month high.
Focus is now on US retail sales data due on Thursday and producer price index numbers on Friday. At least five Fed officials are due to speak this week.
"The gold market seems biased to tactically correct to $1,925-1,950 at some point in the next 1-3 months, and we would buy the dip," Citi Research said in a note.
Spot platinum rose 1.9 per cent to $888.25, palladium gained 1.6 per cent at $877.13 and silver lost 0.2 per cent to $22.03.
"On a technical basis, a break below this level could leave the market open to further downside, while a rebound would help solidify $22.00 as a support base," Kinesis Money said in a note.