Light holiday trading puts pressure on gold as investors await further Fed guidance

20 Feb 2024 , 08:26 AM

Early Asian trading on Tuesday saw a modest decline in gold prices due to pressure from the dollar’s strength and rising treasury yields. Traders were also waiting for more clues from the minutes of the U.S. Federal Reserve’s most recent meeting.

Spot gold was down 0.1% at $2,015.59 an ounce, with trade volumes probably reduced due to a US holiday.

American gold futures increased by 0.2% to $2,026.90 an ounce.

Because of the 0.1% increase in the dollar index and the nearly 4% increase in yields on benchmark 10-year Treasury notes, foreign buyers found it more expensive to purchase bullion priced in US dollars.

For any hints about when the Fed will drop interest rates, all eyes will be on the minutes of its January policy meeting, which are expected on Wednesday.

Federal Reserve Bank of San Francisco President Mary Daly stated that ‘there is more work to be done’ to preserve stable pricing, despite ‘remarkable’ progress on U.S. inflation.

In the meantime, a different Fed official issued a warning about postponing rate decreases for too long.

President of the Federal Reserve Bank of Atlanta Raphael Bostic stated that he is amenable to a summertime rate reduction, but he wants more evidence to be convinced that inflation pressures are indeed decreasing.

Traders now predict a June interest rate cut from the US rather than a March one. The CME Fed Watch Tool indicates that markets are presently pricing in a 74% possibility of a cut in June.

Due to a decline in the price of platinum group metals (PGMs), Anglo American Platinum (Amplats) intends to reduce 17% of the workforce inside the Anglo American business in an effort to control costs.

Spot silver was down 0.3% at $22.94 per ounce, spot platinum was down 0.4% at $894.96 per ounce, while spot palladium was down 0.7% at $946.90. 

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