Gold subdued as US dollar holds firm on fading rate cut hopes
GOLD prices languished near their lowest level in nearly two weeks on Tuesday (Feb 6), weighed down by a firm US dollar and elevated Treasury yields, as traders tempered expectations that the US Federal Reserve would aggressively cut interest rates this year.
Spot gold was flat at US$2,025.24 per ounce, as at 0216 GMT, after hitting its lowest since Jan 25 in the previous session.
US gold futures edged 0.1 per cent lower to US$2,041.30 per ounce.
Data released on Monday showed that the US services sector growth picked up in January as new orders increased and employment rebounded, but suppliers appeared to fall behind, resulting in a measure of input prices rising to an 11-month high.
Two Fed officials said that the US central bank did not need to be overly concerned by recent higher-than-expected economic growth and employment figures and could take time before deciding to reduce interest rates, echoing Powell’s prudence in determining when to cut rates.
The US dollar index hovered near a three-month high, making bullion more expensive for other currency holders, while yields on benchmark 10-year Treasury held above 4 per cent.
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Asian shares edged up thanks to a bounce in battered Chinese markets, although investors were cautious after a slide on Wall Street amid diminishing expectations of a near-term Fed rate cut, which in turn underpinned the dollar.
Friday’s blowout US jobs report dashed prospects of early Fed rate cuts. Traders have repriced their bets to four quarter-point cuts for 2024, down from six last Monday, according to LSEG’s interest rate probability app IRPR.
Investors are awaiting remarks from a host of Fed speakers on Tuesday and the rest of this week for further clues on the timing of rate cuts.
Spot silver fell 0.1 per cent to US$22.33 per ounce, while palladium rose 0.4 per cent to US$952.44 and platinum edged 0.2 per cent higher to US$898.53. REUTERS
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