Gold prices inched lower on Wednesday, as hawkish comments from Federal Reserve officials and strong US data doused hopes for early interest rate cuts, while investors awaited a slew of economic reports this week for more clarity on rate trajectory.
Spot gold fell 0.2% to $2,024.46 per ounce by 0327 GMT. US gold futures were unchanged at $2,025.50.
“Recent economic data out of the US has called for some recalibration in dovish market rate expectations, with some pushback on the timeline for Fed rate cut weighing on gold’s appeal,” said IG market strategist Yeap Jun Rong.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
“That said, rising geopolitical tensions may limit its downside… with the $2,000 level on watch as near-term support to hold,” Rong said.
The dollar index fell 0.1%, but hovered near a six-week high hit on Tuesday.
Yields on benchmark US 10-year Treasury notes edged lower, but held above 4%. In wider financial markets, Asian shares rose on optimism that Chinese authorities would offer support for its stock markets, which have plummeted to multi-year lows.
Market focus is on the US flash PMI report due at 1445 GMT later in the day, fourth-quarter advance GDP estimates on Thursday and personal consumption expenditures data on Friday.
Traders have priced in five quarter-point Fed rate cuts for 2024, down from six cuts two weeks ago.
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Initially seen in March, the first cut is now expected in May with an 89% probability, according to LSEG’s interest-rate probability app IRPR.
A Fed official last week said the baseline for cuts to start was in the third quarter.
Spot silver fell 0.2% to $22.38 per ounce, platinum slipped 0.1% to $899.21, and palladium fell 0.5% to $943.23.
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