Stronger Dollar Pressures Gold Prices Lower

26 Feb 2024 , 10:24 AM

A stronger dollar put pressure on gold prices on Monday, and investors were waiting for more information about when the U.S. Federal Reserve might drop interest rates for the first time this year.

Spot gold was down 0.3% at $2,030.9 an ounce. American gold futures decreased by 0.4% to $2,040.6 an ounce.

The dollar index increased by 0.1%, making bullion priced in US dollars less accessible to purchasers abroad.

Last week, market bets against U.S. interest rate cuts before June were strengthened by Fed Governor Christopher Waller’s statement that he was in ‘no rush’ to drop rates.

A different Fed official believes that the US central bank will lower interest rates ‘later this year,’ even in light of January’s better-than-expected labour market and inflation figures.

According to minutes from the Fed’s most recent meeting, most policymakers were worried about the dangers of lowering interest rates too soon. 

The CME Fed Watch Tool indicates that markets are now pricing in a 68% possibility of a cut in June. Investing in non-yielding bullion is more appealing when interest rates are lower.

In the meantime, investors are selling their holdings in exchange-traded funds (ETFs) backed by gold as a result of a spike in interest in bitcoin ETFs.

Spot silver dropped 0.4% to $22.86 per ounce, spot platinum declined 0.4% to $896.95 per ounce, and spot palladium slipped 0.3% to $968.23.

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