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. 

US stock indices declined today after both Dow Jones and S&P 500 notched up record highs on Wednesday.

Wall Street extended gains this week after positive corporate quarterly results from various US companies for the last quarter of 2023. 

US stocks were boosted as well by forecasts the Fed will eventually start cutting rates this year.

Earlier US data showed initial unemployment claims fell to 218 thousand last week, while analysts expected 221 thousand.

On trading, Dow Jones fell 0.3%, or 100 points as of 17:06 GMT to 38,577, while S&P 500 fell 0.1%, or 5 points to 4,990, as NASDAQ rose 0.2%, or 31 points to 15,788. 

Oil prices rose on Thursday for the fourth straight session amid concerns about supply disruptions in Iraq after the US killed a leader of an Iran-backed militia over there.

Prices are also boosted by expectations of slower growth in US crude production this year, which overcame official data that showed another US inventory buildup. 

Global Oil Prices

US crude rose 1.7% to $76.28 a barrel, while Brent added 1.75% to $80.69 a barrel.

US crude rose 0.8% on Wednesday, while Brent added 0.85% as the dollar tapered off against main rivals. 

Iraq Tensions 

The US forces killed an important leader for an Iran-backed militia by a drone in Baghdad in response to recent attacks on US forces. 

The US continues to target sites in Iraq and Syria used by Iranian forces and their allies. 

US Production 

The Energy Information Administration now officially expects that US production won’t surpass the record high of 13.3 million bpd touched in December 2023 until February 2025. 

The EIA cut its forecasts for local oil production growth in 2024 to just 170 thousand bpd, compared to 1.02 million bpd in 2023.

US Stocks

The Energy Information Administration reported a buildup of 5.5 million barrels in US crude stocks last week to a total of 427.4 million barrels, while analysts only expected a buildup of 1.7 million barrels.

Gasoline stocks fell 3.1 million barrels to 251 million barrels, while distillate stocks tumbled by 3.2 million barrels to 127.6 million barrels. 

Palladium prices fell on Thursday to 2018 lows, sharpening losses for the third straight session amid concerns about weakening global demand, and especially in Europe and China.

Palladium prices tumbled 39% in 2023, marking the worst yearly loss since 2008 due to higher interest rates worldwide, and slower Chinese growth.

In early 2024, palladium’s losses grew, with prices plumbing six-year lows as the odds of early US rate cuts subside. 

Palladium Prices Today 

Palladium prices fell 1.6% to $881.33, an August 2018 low, after tumbling 6% yesterday, the worst loss since December 2022 on grim German industrial manufacturing data.

US Rates

A recent string of strong US data and bullish remarks from Fed officials hurt the odds of an early US rate cut in March. 

Global Demand

Analysts believe that a mix of concerns about Chinese and European demand, especially in the automotive industry, contributed to lower palladium prices. 

In Germany, demand on metals fell more than expected according to official data in line with the steep drop in industrial production in December.