Gold prices fell to their lowest in more than a month on Wednesday, weighed down by strong economic data that boosted the dollar and Treasury yields. Spot gold fell 1.1% to settle at $2,005.29 an ounce, marking its lowest level since December 13. The previous session witnessed a 1.3% decline, the most significant one-day drop since December 4, 2023.
US gold futures mirrored the trend, falling 1.1% to $2,007.3. Stronger-than-expected US retail sales in December provided solid foundations for the economy heading into the new year. The US dollar hit a one-month high, supported by strong retail sales data, while yields on 10-year Treasury notes also rose.
Market uncertainty about the possibility of a US rate cut in March is weighing on gold prices. According to Bob Haberkorn, senior market strategist at RJO Futures, the strong dollar and the time needed to cut rates make it challenging for gold to rally. Nevertheless, geopolitical risks acted as a support, helping to keep the price close to the $2,000 mark.
Federal Reserve Governor Christopher Waller has warned against rapid rate cuts, stressing the need to maintain low inflation. Traders are now pointing to a 57% chance of a rate cut in March, according to the CME FedWatch tool.
Tai Wang, an independent metals analyst based in New York, noted that gold is technically at risk, especially if it closes below $2,020, signaling a downside break in the adjacent range.
Other precious metals also suffered declines, with spot silver down 1.7% to $22.53 an ounce, platinum down 1.8% to $879.20, and palladium down 1.8% to $919.77, its lowest level since 2018. Analysts have been slow to arrive at Platinum Displaydown. Produce two metals near parity in price.
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