Gold Prices Inch Up on Weaker Dollar Amid Fed Rate Cut Speculation

19 Feb 2024 , 09:58 AM

Amidst a softer dollar, gold prices saw a modest uptick on Monday, with bullion partially rebounding from last week’s decline triggered by robust U.S. inflation data, which tempered expectations of imminent rate cuts by the Federal Reserve.

Key Points:

Gold Performance: Spot gold saw a 0.2% increase, reaching $2,017.77 per ounce as of 0050 GMT, following a 0.5% loss last week. Similarly, U.S. gold futures edged 0.3% higher to $2,029.80 per ounce.

Dollar Influence: The dollar index experienced a 0.1% decline, rendering greenback-priced gold more accessible to international buyers.

Market Dynamics: Last week witnessed a dip in bullion prices to a two-month low following reports of higher-than-expected consumer price growth. However, gold managed to claw back some of its losses later in the week after disappointing U.S. retail sales figures for January were revealed.

Fed Commentary: Federal Reserve Bank of Atlanta President Raphael Bostic expressed a need for more data to confirm any significant decline in inflationary pressures, although he remained open to potential rate cuts in the coming months. On the other hand, Chicago Fed President Austan Goolsbee warned against prolonged delays in implementing rate cuts, despite January’s consumer price uptick.

Market Expectations: Traders have revised their projections for a U.S. interest rate cut from March to June, with the current market sentiment indicating a 77% probability of a rate cut in June, according to the CME Fed Watch Tool.

Holiday Impact: With most U.S. markets closed on Monday for the President’s Day holiday, trading volumes are expected to be subdued.

Precious Metals Outlook: Spot platinum experienced a 0.2% decline to $904.27 per ounce, while palladium saw a 1.2% rise to $960.76 per ounce. Silver, however, dipped by 0.2% to $23.35 per ounce.