Gold weakens as dollar and yields weigh on prices

Bengaluru — Gold prices were subdued on Tuesday as the dollar and treasury yields rose, while traders waited to hear from a slew of US Federal Reserve speakers for more clarity on the central bank’s rate cut prospects.

Spot gold was down 0.3% at $2,049.20 per ounce at 4.02am GMT. US gold futures rose 0.1% to $2,052.90.

Weighing on gold, the dollar has strengthened ahead of Christopher Waller’s speech, which is arguably the bigger event for the week, said Matt Simpson, a senior analyst at City Index.

The dollar index touched a 10-day high, making bullion less attractive for other currency holders, while yields on benchmark US 10-year treasury notes rose above 4%.

At least six Fed officials are due to speak this week, with Fed governor Christopher Waller scheduled to deliver a speech on the economic outlook before the Brookings Institution at 4pm GMT.

“With multiple rate cuts having been priced in by market, I wouldn’t be surprised if Waller feels inclined to push back, a move back to $2,035 (for spot gold) could be plausible,” Simpson said.

At the end of its January 30-31 meeting, the Fed is expected to hold its policy rate steady. Traders are betting on six rate cuts of 25 basis points each this year, with about a three-in-four chance that the first one could come as soon as March, according to LSEG’s interest rate probability app, IRPR.

Lower interest rates increase non-yielding bullion’s appeal.

Elsewhere, European Central Bank officials pushed back against market expectations for rapid rate cuts this year.

According to Reuters technical analyst Wang Tao, spot gold may retrace to $2,042 per ounce, after its repeated failures to break resistance at $2,060.

Spot silver fell 0.4% to $23.11 per ounce, platinum declined 0.6% to $909.37, and palladium slipped 0.7% to $964.89.

Reuters