Gold plumbs two-month trough after giving up $2000

Gold prices fell in European trade on Wednesday, sharpening losses for the sixth straight session and plumbing two-month lows after giving up $2000. 

Such losses came amid growing pressures from higher US 10-year treasury yields, after strong US inflation data hurt the odds of early Fed rate cuts in March and May. 

Gold Prices Today

Gold prices fell 0.2% to $1,988 an ounce, the lowest since December 13, with a session-high at $1,993. 

Gold prices lost 1.45% on Tuesday, the fifth loss in a row, and the largest in 2024 due to US inflation data.

US Treasury Yields 

US 10-year treasury yields rose 0.4% on Wednesday, extending gains for the sixth straight session, and hitting an 11-week high at 4.332% and pressuring non-yielding assets. 

Such developments came after bullish US inflation data reduced the likelihood of early US rate cuts this year.

US Inflation Data

Official US data showed consumer prices rose 3.1% y/y in January, above estimates of 2.9%, and down from 3.4% in the previous reading.

Core prices, excluding food and energy, rose 3.9% y/y, beating estimates of 3.7%, and the same as the previous reading. 

US Rates 

Such data reduced the odds of a US interest rate cut in March to just 9%, while the odds of such a cut in May tumbled to just 37%. 

Traders now expect four US rate cuts this year totalling 100 basis points, down from previous expectations of six rate cuts totalling 150 basis points back in January. 

The SPDR 

Gold Holdings at the SPDR Gold Trust fell 1.44 tonnes yesterday to a total of 840.48 tonnes, the lowest since August 2019.