Gold Prices Dip Amid Dollar and Bond Yields Uptick

28 Mar 2024 , 10:41 AM

Gold prices experienced a slight decline on Thursday as the U.S. dollar and bond yields registered gains following comments from a Federal Reserve official regarding interest rate cuts. Investors awaited further economic data for insights into future policy decisions.

As of 0139 GMT, spot gold fell by 0.2% to $2,189.29 per ounce, while U.S. gold futures edged down 0.1% to $2,188.30 per ounce.

Fed Governor Christopher Waller’s remarks on Wednesday, citing recent disappointing inflation data as grounds for the central bank to hold off on cutting short-term interest rates, contributed to the uptick in the dollar, making gold relatively more expensive for holders of other currencies. Additionally, yields on 10-year Treasury notes rose.

Market participants now await the release of the U.S. core personal consumption expenditure (PCE) price index report on Friday to gauge potential shifts in Fed interest rate policy. The PCE price index is anticipated to rise by 0.3% in February, maintaining an annual pace of 2.8%. Additionally, investors are monitoring the weekly U.S. initial jobless claims report scheduled for later in the day.

Traders are adjusting their expectations, with a decrease in the probability of the Fed initiating rate cuts in June, now standing at 62% compared to the 70% chance observed on Wednesday, according to the CME Group’s FedWatch Tool. Lower interest rates typically diminish the opportunity cost of holding gold.

Meanwhile, India’s gold imports are projected to plummet by over 90% in March compared to the previous month, reaching the lowest levels since the COVID-19 pandemic began, as banks reduce imports following decreased demand amidst record-high prices.

Spot silver declined by 0.4% to $24.56 per ounce, while platinum rose by 0.4% to $897.10 and palladium gained 0.4% to $987.66 per ounce.