Gold Dips on Fed Jitters: Monthly Decline Reflects Rate Worries

31 Jan 2024 , 10:19 AM

As investors reduced their expectations of quicker and more significant rate reduction in the United States in light of the country’s robust economy and anticipated comments from the Federal Reserve later in the day, gold prices were headed for their first monthly decrease in four.

Spot gold hit a two-week high of $2048.12 in the previous session, but on Wednesday it was unchanged at $2,035.09 per ounce.

This month, spot prices have decreased by 1.3% thus far. Futures for US gold increased by 0.2% to $2,034.60.

 According to LSEG’s interest rate probability software IRPR, traders priced in roughly 130 basis points (bps) of Fed rate reduction for this year, down from predictions of more than 160 bps at the end of 2023.

Based on money market pricing, the likelihood of a rate cut in March has decreased from almost 90% to 43%.

The dollar index, which has gained more than 2% in January, was poised to record its best month since September.

 Benchmark U.S. Treasury note yields remained higher than the year-end finish of 3.8600% even at a two-week low of 4.0261%.

The Fed’s two-day policy meeting ends at 1900 GMT, and the market will be watching for its statement. It is anticipated that the Fed will leave rates unchanged. Chair Jerome Powell will have a news conference at 1930 GMT.

According to data released on Tuesday, the number of job opportunities in the United States surprisingly jumped in December, and in January, consumer confidence reached a two-year high.

Palladium edged down by 0.1% to $975.49, platinum remained stable at $920.57, and spot silver dropped by 0.2% to $23.12 per ounce. A monthly reduction was also anticipated for all three.

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