Gold prices fell slightly on Wednesday, pressured by rising U.S. Treasury yields and a stronger dollar after data suggested the Federal Reserve may slow the pace of rate cuts this year.
Spot gold slipped 0.1% to $2,648.16 an ounce, as of 0308 GMT. U.S. gold futures fell 0.1% to $2,662.30.
“The Dollar Index has rebounded on hopes for less volatile monetary policy from the Fed this year, so overall there is some weakness in gold prices,” said Kelvin Wong, OANDA Senior Market Analyst for Asia Pacific.
The dollar strengthened and the benchmark 10-year Treasury yield rose to its highest level in eight months after data on Tuesday pointed to a strong economy.
U.S. job openings in November increased to 8.098 million, beating forecasts and October’s figure of 7.839 million.
According to the CME’s FedWatch tool, markets are currently pricing in the likelihood of just one Fed interest rate cut in 2025, down from two in December.
The market now awaits the US non-farm payrolls report on Friday to get more clues on Fed policy. ADP employment figures and the minutes of the December Fed meeting, due later today, are also in investors’ sights.
“Any weakness in U.S. macroeconomic data this week could pave the way for gains if investors become more optimistic about Fed interest rate cuts in 2025,” KCM Trade analysts said in a note.
The Fed’s projections in December implied a shift toward a more cautious pace of rate cuts this year, with most policymakers expressing concern about a possible pick-up in inflation.
Bullion is seen as a hedge against inflation, but high rates reduce the appeal of this non-yielding asset.
Meanwhile, top consumer China added gold to its reserves in December for the second consecutive month, according to official data from the People’s Bank of China released Tuesday.
Spot silver added 0.3% to $30.11 an ounce, platinum fell 0.5% to $946.11 and palladium edged down 0.2% to $923.87 .
