Gold loses shine as expectations interest rate cut fade

Gold prices fell on Monday as traders’ expectations of an imminent interest rate cut faded, and the safe haven lost its appeal as risk appetite improved ahead of major US economic data and important central bank meetings this week.

According to Reuters, gold prices in spot transactions fell 0.4% to $2,022.28 per ounce by 0639 GMT. US gold futures also fell 0.3% to $2,023.80.

Expectations that the Federal Reserve (the US central bank) would cut interest rates in March faded, apparently putting a ceiling on gold prices. Kelvin Wong, chief market analyst for the Asia-Pacific region at OANDA, said that geopolitical uncertainty in the Middle East – especially around shipping in the Red Sea – supports gold remaining above $2015.

Japanese stocks supported US and European futures to rise on Monday, as hype around artificial intelligence fueled technology stocks ahead of a week filled with central bank meetings, important economic data and corporate results.

Other safe havens declined, and the dollar index fell 0.1 percent to the lowest level in almost a week, while benchmark US Treasury bond yields for ten years fell from the highest level in more than a month to 4.1148 percent.

Gold fell about 1 percent last week, its largest weekly decline in six weeks, after Federal Reserve officials said that the central bank needs more inflation data before issuing any decision on lowering interest rates.

Traders currently expect interest rates to be reduced by 132 basis points this year, after two weeks ago they had expected them to be reduced by 150 basis points, according to the IRBR application of interest rate probabilities of the London Stock Exchange Group.

Higher interest rates would increase the opportunity cost of holding bullion.

As for other precious metals, silver fell in spot transactions 1.9 percent to $22.18 per ounce, platinum fell 0.3 percent to $896.27, and palladium fell 0.8 percent to $938.70.