Gold Slips Further Below $2,000 as Markets Temper Fed Rate-Cut Bets

SEATTLE (Scrap Monster): Gold prices hit a fresh two-month low on Wednesday, sliding further below the key $2,000-per-ounce level, as a stronger-than-expected U.S. inflation report prompted traders to trim bets for deeper rate cuts by the Federal Reserve.

Spot gold fell 0.2% to $1,988.05 per ounce (Oz), as of 0825 GMT, hitting its lowest since Dec. 13. Bullion fell about 1.4% on Tuesday in its biggest daily decline since Dec. 4.

U.S. gold futures slipped 0.3% to $2,000.80/Oz.

Gold came under pressure after the U.S. inflation report showed consumer prices rose more than expected in January, pushing back the projected timing of first Fed rate cut as well as the amount of cuts that were seen by year-end, said Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.

Data on Tuesday showed the CPI rose 3.1% on an annual basis, above forecasts for a 2.9% increase.

The next key support level for spot gold is $1,975/Oz as it coincided with the December Federal Open Market Committee meeting where they announced three-quarter point rate cuts in 2024, fuelling a gold rally, said Wong.

Traders have lowered their bets from four quarter-point rate cuts for 2024, in line with the Fed's "dot plot" released in December. The Fed may wait until June before cutting interest rates.

The U.S. dollar index hovered near a three-month peak, while 10-year Treasury yields were near a 2-1/2-month high.

Investors will now focus on U.S. retail sales data due on Thursday and producer price index numbers due on Friday. At least five Fed officials are due to speak this week.

Spot platinum was steady at $872.10/Oz, palladium was flat at $863.76, and silver slipped 0.5% to $21.96.

 Courtesy: www.reuters.com