Gold Treads Water as Traders Look to Fed for Rates Guidance

7 Feb 2024 , 11:12 AM

As traders anticipated remarks from a number of Federal Reserve officials this week to gauge when the American central bank may begin lowering interest rates, gold prices struggled to find a clear trend on Wednesday.

Spot gold remained stable at $2,035.12 an ounce, following a gain of more than 0.5% during the previous session.

American gold futures remained unchanged at $2,051.20 an ounce.

Federal Reserve officials stated on Tuesday that rate reductions may be possible if the US economy grows as anticipated. However, the war on inflation is ‘not done yet.’

Fed head Jerome Powell also mentioned in an interview that aired on Sunday that the Fed might decide to take its time before deciding to cut interest rates.

The opportunity cost of storing bullion is increased by high interest rates, which lessens its appeal relative to other assets.

Traders reduced their bets on a May U.S. rate decrease in response to better-than-expected jobs and services sector statistics released. By 2024, four quarter-point drops are anticipated, based on the interest rate probability app (IRPR) developed by LSEG.

Market focus will be on comments from atleast five more Fed officials this week, and later shift to next week’s inflation report due next Tuesday for further clues on Fed policy.

As benchmark 10-year Treasury note yields and the dollar index continued to decline, non-yielding bullion became increasingly attractive to other currency holders.

Spot silver increased by 0.1% to $22.41 an ounce, palladium decreased by 0.1% to $949.83, and platinum was unchanged at $903.99.

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