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Gold hits a more than one-month low

Gold

Spot gold was 1.2% lower at $2,003.89 per ounce, lowest since December 13

Gold prices dropped to a more than one-month low on Wednesday as strong economic data firmed dollar and Treasury yields and lowered market expectations of a U.S. rate cut in March.

Spot gold was 1.2% lower at $2,003.89 per ounce as of 1855 GMT, lowest since December 13. It dropped 1.3% in the earlier session in its biggest single-day decline since December 4, 2023.

U.S. gold futures settled 1.2% down at $2006.5.

U.S. retail sales rose more than expected in December, keeping the economy on solid ground heading into the new year.

The U.S. dollar hovered at a one-month high following strong retail sales data. While yields on the benchmark U.S. 10-year Treasury notes also gained.

The markets are having doubts about interest rate reductions if the Federal Reserve 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 near $2,000, Haberkorn added.

Fed Governor Christopher Waller’s on Tuesday said that the central bank should not rush to reduce rates until lower inflation can be sustained.

Traders are now pricing in almost a 53% probability of a rate cut in March, as per the CME FedWatch tool.

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

Spot silver dropped 1.7% to $22.52 per ounce, and platinum shed 1.3% to $883.02.

Palladium slid 2.1% to $916.82, marking its lowest level since 2018.

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