Gold edges down under pressure from higher US yields

Economies.com
2024-02-09 08:48AM UTC

Gold prices fell in European trade on Friday, extending losses for the third straight session under pressure from higher US treasury yields, and following bullish remarks from Fed officials.

 

Strong US data and remarks from Fed officials hurt the odds of a US interest rate cut in March and May. 

 

Gold Prices Today

 

Gold prices fell 0.2% to $2,030 an ounce, with a session-high at $2,035, after losing 0.1% yesterday, the second loss in a row as the dollar gained ground.

 

US Yields 

 

US 10-year treasury yields rose by over 0.4% on Friday, extending gains for the third straight session and almost hitting multi-week highs, hurting non-yielding assets. 

 

Yields added 15 basis points this week as investors changed the prospects of upcoming US rate cuts following recent strong data and bullish remarks by Fed officials.  

 

US Economic Flexibility 

 

Recent US data showed unemployment claims fell more than expected in yet another sign of strength and resilience by the US economy. 

 

US Remarks 

 

Several US Fed officials dismissed the need for early US rate cuts and policy easing this year in light of recent data.

 

Richmond Fed President Thomas Parkin said that Fed policymakers have ample time to decide on US rate cuts.

 

Minneapolis Fed President Neil Kashkarei said the Fed has time to study recent data before deciding on rate cuts and policy easing.   

 

Chicago Fed President Austan Goolsbey said he’s like to see more positive inflation data before deciding on rate cuts. 

 

 US Rates

 

The odds of a 0.25% interest rate cut in March fell to just 17.5%, while the odds for such a cut in May fell to 62%. 

 

The SPDR

 

Gold holdings at the SPDR Gold Trust rose 1.44 tonnes yesterday to a total of 843.66 tonnes, away from August 2019 lows at 842.22 tonnes. 

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