Spot gold has slipped 0.1% to $2,026.71 per ounce, while U.S. gold futures have fallen 0.4% to $2,035.90 per ounce
The rebounding U.S. dollar has caused gold prices to decline for the third consecutive day. Traders are now closely watching key economic data that will determine the timing of the Federal Reserve’s interest rate cuts.
As of 1049 GMT, spot gold has slipped 0.1% to $2,026.71 per ounce, while U.S. gold futures have fallen 0.4% to $2,035.90 per ounce.
The dollar index has risen 0.3%, its strongest session since Feb. 13, making gold less attractive for holders of other currencies. This has impacted the demand for gold.
Investors are eagerly awaiting the U.S. GDP data, which is scheduled to be released at 1330 GMT. Additionally, the Federal Reserve’s preferred inflation gauge, the core personal consumption expenditures (PCE) price index, will be released on Thursday.
According to SP Angel analyst John Meyer, the robust PCE data is likely to delay the Fed rate cuts, resulting in a stronger U.S. dollar and limiting the upward movement of gold in the short term. Meyer also mentioned that central banks are expected to continue buying gold to counter increasing global uncertainty ahead of a Fed rate cut.
The expectations for the first rate cut by the Fed have been pushed back to June, compared to the initial expectation of March. Higher interest rates typically discourage investments in non-yielding assets like gold.
Fed Governor Michelle Bowman recently reiterated the central bank’s patient approach to easing, citing potential risks to inflation.
Investors will closely analyze the comments from at least nine more Fed officials who are scheduled to speak this week.
In other precious metals, spot platinum has fallen 0.5% to $883.80 per ounce, palladium has dropped 2.2% to $915.41, and silver has declined 0.5% to $22.32.
Citi Research has stated in a note that palladium prices could experience a significant increase of $200-$300 per ounce due to supply constraints and short spec positioning. However, the long-term demand outlook for palladium remains negative.
