Gold skids to two-week trough as dollar gains ground

Gold prices skidded in European trade on Thursday to two-week lows away from the psychological barrier of $2900 amid ongoing profit-taking, while the dollar gained ground against major rivals. 

The odds of a Fed interest rate cut in March fell sharply, with investors now waiting for crucial US GDP growth and unemployment claims data to gather more clues.

Prices

Gold prices fell 1.35% to $2877 an ounce, the lowest since February 12, down from the opening of $2916.

On Wednesday, gold rose 0.1% after a 1.9% drop on Tuesday, marking the largest loss in two weeks on profit-taking away from a record high at $2956.

The Dollar

The dollar rose 0.25% on Tuesday against a basket of major rivals, making greenback-denominated gold futures costlier to holders of other currencies.

As Trump prepares to impose tariffs on Mexico and Canada, while threatening the EU and other countries with additional tariffs, inflationary concerns are mounting on the Federal Reserve, with interest rates likely remaining at current levels for an extended duration.

US Rates

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at just 2.5%.

Now traders await crucial US GDP growth and unemployment claims data today, in addition to remarks by several Fed officials on the future of the battle with inflation and monetary policies.

SPDR

Gold holdings at the SPDR Gold Trust fell 0.86 tons yesterday to a total of 906.96 tons, away from August 2023 highs at 907.82 tons.