Gold struggles below US$2,000 per ounce as US Fed cut bets trimmed
GOLD languished near a two-month low on Wednesday (Feb 14), trading below the key US$2,000 per ounce (Oz) level, after a stronger-than-expected United States inflation report dampened expectations for more than three quarter-point rate cuts from the US Federal Reserve.
Spot gold was down 0.1 per cent at US$1,991.09/Oz, as at 0146 GMT, after hitting its lowest since Dec 13 on Tuesday. Bullion fell about 1.4 per cent on Tuesday in its biggest daily decline since Dec 4.
US gold futures fell 0.2 per cent to US$2,003.60/Oz.
US consumer prices increased more than expected in January amid rises in the costs of shelter and healthcare.
Fed policymakers will probably wait until June before cutting interest rates, traders bet after the US CPI data. Higher interest rates increase the opportunity cost of holding bullion.
The US dollar index hovered near a three-month peak, while 10-year Treasury yields were near a two-and-half-month high.
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Global stock market indexes dropped on Tuesday, with all three major US stock indexes falling more than 1 per cent each.
Money markets have factored in about three quarter-point rate cuts this year, down from four cuts before the inflation data. This is in line with the Fed’s rate forecasts, or what is called the “dot plot” released back in December.
The first Fed rate cut is now expected to come in June, with a 75 per cent probability.
Trading volume is expected to be thin with markets in China closed for the Chinese New Year holidays.
Investors will now focus on US retail sales data due on Thursday and producer price index numbers due on Friday. At least 5 Fed officials are due to speak this week.
Spot platinum fell 0.1 per cent to US$870.81/Oz, palladium dropped 0.5 per cent to US$859.49, and silver slipped 0.2 per cent to US$22.03. REUTERS
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