US Gold Prices Fall as Rate Cut Expectations Diminish: Impact on Crypto

• US Gold Prices Experience a Dip
• Performance of Other Precious Metals
• Factors Influencing Gold's Decline
• Economic Data and Interest Rates
• The Role of the Federal Reserve
• Federal Reserve Rate Cut Possibility Decreases
• Upcoming Economic Indicators

US Gold Prices Experience a Dip

On Monday, US gold prices experienced a dip as investor expectations of interest rate cuts by the end of March 2024 were lowered. Spot gold prices experienced a 0.5% fall, settling at $2,020.09 per ounce at 1:49 p.m. ET. Conversely, the futures price of the yellow metal witnessed a 0.3% decrease, standing at $2022.2.

Performance of Other Precious Metals

Meanwhile, spot silver prices also saw a decrease of 2.1%, with a new price of $22.13 per ounce. Platinum fell by 0.7% to $892.89, while palladium experienced a 1% dip, closing at $936.69.

Factors Influencing Gold's Decline

According to Jim Wyckoff, a senior analyst at Kitco Metals, the decline in interest in both gold and silver markets is due to two key factors. Wyckoff attributed the decline to both technical selling and a rally in the stock markets, which have drawn investor attention away from precious metals.

Economic Data and Interest Rates

Wyckoff explained further that improved US economic data suggests that the Federal Reserve may need to postpone lowering interest rates. Higher interest rates, in turn, can increase the opportunity cost of holding precious metals. Gold prices fell about 1% in the last week, marking the most significant weekly decrease in six weeks.

The Role of the Federal Reserve

This decline followed the statement from the US Federal Reserve indicating the need for more inflation data before making any decisions about rate cuts. Moreover, the Federal Reserve mentioned that the baseline for rate cuts would likely be in the third quarter of this year.

Federal Reserve Rate Cut Possibility Decreases

According to the CME Fed Watch Tool, the chance of the Federal Reserve cutting interest rates in March is 41.6%. This is a significant decrease from last week, where traders had priced in a 70% chance of a rate cut in March.

Upcoming Economic Indicators

Investors and traders are keenly observing the upcoming US flash PMI report on Wednesday, the fourth-quarter advance GDP estimates due on Thursday, and personal consumption expenditures data due on Friday. These data will likely provide insight into the Federal Reserve's next move.

Edited by Jonathan Stoker