Gold Prices Extend Decline as U.S. Dollar Strengthens Following Hawkish Fed Remarks

17 Jan 2024 , 10:56 AM

While traders expected remarks from further Fed speakers this week, gold prices continued their declines on Wednesday as the U.S. currency rose following hawkish remarks from a Federal Reserve official that reduced prospects for a March interest rate cut.

Spot gold was down 0.2% at $2,023.49 per ounce, following a 1.3% decrease in the previous session, which was the largest one-day drop since December 4, 2023.

In addition, U.S. gold futures dropped 0.2% to $2,026.90.

The dollar index opened a new tab and increased by 0.1%, increasing the cost of bullion for holders of other currencies. Following Fed Governor Christopher Waller’s statement on Tuesday that the US central bank shouldn’t cut interest rates too quickly until reduced inflation can be clearly sustained, it soared up to a high of more than one month.

Waller’s remarks set off a widespread sell-off that resulted in a decline in all three of the major U.S. market indices. On Tuesday, the benchmark U.S. Treasury yields saw their largest daily increase in over three months.

The CME FedWatch tool opens new tab shows that traders are pricing in a about 65% possibility of a rate decrease by the US central bank in March, down from a roughly 75% probability reported on Tuesday morning.

Spot silver dropped 0.4% to an ounce for $22.81.

Palladium fell by 0.2% to $934.44 while platinum fell by 0.3% to $892.37. The pace at which platinum is replacing palladium in the production of autocatalysts is decreasing as the sister metals get closer to price parity; this trend is probably going to continue this year.

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