Gold close to five-week low on hawkish Fed comments

Bengaluru — Gold prices hovered near five-week lows on Thursday, as hawkish remarks from Federal Reserve officials and robust data dampened investor expectation for deeper and early interest rate cuts in US in 2024.

Spot gold edged 0.1% higher to $2,008.59/oz by 3.47am GMT, a day after it fell to $2,001.72 — its lowest since December 13.

US gold futures rose 0.2% to $2,010.70.

The dollar has strengthened substantially in the past few days, putting a strain on gold prices, Brian Lan at the Singapore-based dealer GoldSilver Central, said.

The dollar held close to a five-week peak after data overnight showed US retail sales increased more than expected in December, keeping the economy on solid ground heading into the New Year. Yields on the benchmark US 10-year treasury notes also hovered near five-week highs.

A stronger dollar makes greenback-priced gold more expensive for foreign currency holders.

“The year has just started and probably a lot of investors think that prices are not going any higher, so it’s time to take profit … it’s a usual market cycle from what we see,” GoldSilver’s Lan said.

Traders will be watching out for remarks from Atlanta Federal Reserve president Raphael Bostic, who is expected to speak at two separate events later in the day.

Bostic has said inflation could “see-saw” if policymakers cut rates too soon, echoing Fed governor Christopher Waller’s remark that the Fed should not rush to lower interest rates until lower inflation can clearly be sustained.

Money markets were betting on 142 basis points (bps) of Fed rate cuts this year, while pricing in a 61% chance of a March easing, according to LSEG’s interest rate probability app, IRPR.

Lower interest rates decrease the opportunity cost of holding bullion.

Spot silver rose 0.4% to $22.61/oz, platinum climbed 0.3% to $885.86, and palladium gained 1.1% to $925.32.

Reuters