Gold starts recovering as US treasury yields taper off

Gold prices rose in European trade on Thursday for the first session in seven, starting to recover from two-month lows as US treasury yields slow down.

Now traders await crucial US data later today that will help determine the likely path ahead for Fed policies this year.

Gold Prices Today 

Gold prices rose 0.2% to $1,996 an ounce, with a session-low at $1,990, after falling 0.1% on Wednesday, the sixth loss in a row, plumbing two-month lows at $1,984 as the odds of a Fed rate cut in March wane. 

US Yields

US 10-year treasury yields fell 0.8% on Thursday away from recent 11-week highs at 4.332%, underpinning non-yielding assets like gold.

The developments come ahead of important US data and remarks by Fed officials later today, expected to delineate the future of US interest rates. 

US Rates

Markets are currently pricing in an 11% chance of a Fed 0.25% interest rate cut in March, with only a 44% chance of such a cut in May.

Traders now expect 3 or 4 Fed rate cuts, valued at 100 basis points in 2024, down from 150 basis points of rate cuts in previous forecasts according to the LSEG interest rate probability app. 

Chicago Fed President Austan Goolsbey recently warned from waiting too long before cutting interest rates, taking an usually bearish stance on the issue.  

Now traders await important US retail sales, unemployment claims, and industrial production later today to determine the likely path ahead for monetary policies. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.44 tonnes yesterday, the second decline in a row, to a total of 839.04 tonnes, the lowest since August 2019.