Gold firms after hopes for lowering interest rates diminish

Gold stabilized on Wednesday after a significant decline in the previous session, as statements by a Federal Reserve official (the US central bank) weakened expectations about cutting interest rates in March.

According to Reuters, the price of gold did not change in spot transactions and remained at $2027.62 per ounce by 0236 GMT, after it fell 1.3% in the previous session, which is the largest decline in one day since the fourth of December.

The price of US gold futures changed slightly to $2,030.90.

Christopher Waller, a member of the US Federal Reserve’s Board of Governors, said on Tuesday that although the United States is “close to” the inflation target set by the central bank of two percent, the bank should not rush to reduce the benchmark interest rate until it is clear that the decline in inflation will continue.

Waller’s comments sparked widespread selling, sending the three major US stock indexes lower. His comments pushed the dollar to its highest level in more than a month and benchmark US Treasury bond yields to record their largest increase in more than three months on Tuesday.

A stronger dollar would make bullion more expensive for holders of other currencies, while higher interest rates reduce the appeal of non-yielding gold.

Market expectations for an interest rate cut in March fell to a chance of 62.2%, compared to 76.9% in the previous session, according to the CME Fed Watch tool.

However, markets are still betting on six interest rate cuts this year, by 25 basis points each time.

In terms of other precious metals, silver, platinum, and palladium fell by 0.1% separately. The price of silver in spot transactions reached $22.89 per ounce, platinum $894.29, and palladium $937.52.

​