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Gold hurt by dollar rebound; traders eye key data for Fed rate cut timing

February 28, 2024

LONDON (February 28) Gold prices edged down for a third straight day on Wednesday, hurt by a rebounding U.S. dollar, ahead of crucial economic data which help shape investors’ view on the timing of the Federal Reserve’s interest rate cuts.

Spot gold slipped 0.1% at $2,026.71 per ounce, as of 1049 GMT. U.S. gold futures fell 0.4% to $2,035.90 per ounce.

The dollar index rose 0.3%, its best session since Feb. 13, making greenback-priced bullion less appealing for other currency holders. [USD/]

Markets await the U.S. GDP data due at 1330 GMT, while the Federal Reserve’s preferred gauge of inflation – the core personal consumption expenditures (PCE) price index – is due on Thursday.

“I see PCE data remaining robust and more likely to push back Fed rate cuts, and this should help lift the slightly softer U.S. dollar and looks likely to hold gold back in the short term,” said SP Angel analyst John Meyer.

“Central banks are likely to continue to buy gold to offset increasing global uncertainty ahead of a Fed rate cut.”

Bets of Fed’s first rate cut have been pushed out to June, compared to March at the start of the year. Higher rates tend to discourage investment in non-yielding gold.

Fed Governor Michelle Bowman on Tuesday reinforced the U.S. central bank’s patient stance on easing, citing upside risks to inflation.

Investors will parse through comments from at least nine more Fed officials due to speak this week.

Spot platinum fell 0.5% to $883.80 per ounce, while palladium dropped 2.2% to $915.41, while silver fell 0.5% to $22.32.

Citi Research in a note said palladium prices could easily spike by $200-$300 per ounce on major supply headwinds given thin liquidity and record short spec positioning, but noted the metal’s long-term demand outlook remains very negative.

Reuters

 

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