By Sherin Elizabeth Varghese
(Reuters) – Gold prices are set to end the first month of 2024 in negative territory, snapping a three-month gaining streak on Wednesday, as investors reduced their expectations of early interest rate cuts this year as they await the U.S. central bank’s outlook on policy rates later in the day.
Spot gold was flat at $2,036.88 per ounce by 1040 GMT, while U.S. gold futures rose 0.3% to $2,036.70.
Gold has declined 1.3% so far this month after surging to a record peak in December, as traders have pared back bets of a March U.S. rate cut. The odds of a Federal Reserve rate cut in March have dropped to about 46% currently, from about 90% a month ago, according to the CME FedWatch Tool.
“Fed officials will keep all options on the table and make the decision for the March meeting dependent on incoming macro data,” UBS analyst Giovanni Staunovo said.
“So would expect modest price moves in gold with the focus shifting on job and inflation data over the coming weeks.”
The two-day Federal Open Market Committee (FOMC) meeting concludes later today. While the Fed is likely to keep interest rates unchanged, Chair Jerome Powell’s news conference at 1930 GMT will be watched for insight into how soon Fed will cut interest rates this year.
“Signs of strength in the U.S. economy make it more likely that the U.S. Fed would leave interest rates unchanged in the short-term, creating a headwind for non-yield-bearing assets like gold,” Frank Watson, market analyst at Kinesis Money, said in a note.
Pressuring gold, the dollar index was on course for its best month since September and benchmark U.S. Treasury notes yielded 3.9920%, a more-than-two-week low.
Spot silver prices dropped 0.5% to $23.0442 per ounce, while platinum slipped 0.2% to $919.37, and palladium was up 0.1% at $976.80. All three were poised for a monthly decline.
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Mrigank Dhaniwala)
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