Gold declines as dollar rises, hopes for lower interest rates diminish

Gold prices stabilized near their lowest levels in about two weeks on Tuesday, affected by the rise in the dollar and Treasury bond yields and by traders’ lower expectations that the US Federal Reserve (the central bank) will cut interest rates strongly this year.

According to Reuters, the price of gold in spot transactions remained at $2,025.24 per ounce by 0216 GMT, after recording its lowest levels since January 25 in the previous session.

US gold futures fell 0.1 percent to $2,041.30 an ounce.

Data released on Monday showed that US services sector growth rebounded in January as new orders increased and employment rose, but suppliers appeared to be lagging behind, sending input prices to the highest level in 11 months.

Two Federal Reserve officials said the US central bank does not need to be overly concerned about recent higher-than-expected economic growth and employment numbers, and it could take some time before it decides to cut interest rates. They followed the approach of Council Chairman Jerome Powell, who said that the central bank may be “prudent” in evaluating interest rate cuts.

The dollar index hovered near its highest level in three months, making gold more expensive for holders of other currencies, while benchmark ten-year Treasury bond yields remained above four percent.

Investors are awaiting comments from a group of Federal Reserve spokesmen on Tuesday and throughout the rest of this week for further clues on the timing of interest rate cuts.

As for other precious metals, silver fell in spot transactions 0.1% to $22.33 per ounce, while palladium rose 0.4% to $952.44 and platinum rose 0.2% to $898.53.