Gold retreats to near one-week low on hawkish Fed comments

By Anushree Ashish Mukherjee

- Gold prices fell for a second straight session to a near one-week low on Wednesday hurt by a stronger dollar and Treasury yields following hawkish comments from a Federal Reserve policy maker that dimmed expectations of a U.S. rate cut in March.

Spot gold was down 0.4% at $2,019.39 per ounce as of 9:41 a.m. ET (1441 GMT), lowest since Jan. 11. It fell 1.3% in the previous session in its biggest single-day decline since Dec. 4, 2023.


U.S. gold futures fell 0.4% to $2,022.60.

The U.S. dollar hovered at a one-month high following Fed Governor Christopher Waller's comment that the central bank should not rush to cut rates until lower inflation can be sustained. While yields on the benchmark U.S. 10-year Treasury notes also gained.[USD/]

"The markets are having doubts about interest rate cuts if the Fed can cut sooner than later, which is pressuring gold prices. With the dollar being strong and cuts taking time, it is hard for gold to hold a rally," said Bob Haberkorn, senior market strategist at RJO Futures.

"However, geopolitical risk will keep providing a base to prices and hold them around $2,000."

Traders are now pricing in around a 61% chance of a rate cut in March, compared to around 73% before Waller's comment, according to CME FedWatch tool.

A stronger dollar makes gold more expensive for buyers in other currencies, while high-interest rates negatively affect the non-yielding metal.

There are encouraging signs in commercial demand for silver, which may attract investors, Bank of America said in a note dated Tuesday, reinforcing its constructive view on the metal for 2024.

Spot silver fell 1.1% to $22.65 per ounce, and platinum declined 0.9% to $887.39.

Palladium slipped 3.1% to $907.50, marking its lowest since 2018.

The rate at which platinum is displacing palladium in the manufacture of autocatalysts is slowing due to the sister metals approaching price parity, a trend likely to persist through this year, analysts said.

(Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru; Editing by Tasim Zahid)