Gold slides on brewing concerns of US rate cuts still far off

Jan 11 – Gold eased on Thursday to a one-month low as the dollar ticked higher after hotter-than-expected inflation data, while hawkish remarks from Federal Reserve officials fuelled worries that higher interest rates could stay unchanged beyond March.

Spot gold was down 0.1% at USD 2,024.99 per ounce, as of 2:30 p.m. ET (1930 GMT), after rising as much as 0.8% before the data.

US gold futures settled 0.4% lower at USD 2019.20.

The dollar index extended gains after data showed US consumer prices rose more than expected in December, which could delay a much anticipated US rate cut in March.

Cleveland Fed President Loretta Mester said it would likely be too soon for the central bank to cut its policy rate in March, while Richmond Fed chief Tom Barkin said gains on inflation have been too narrowly focused on goods.

“We got a little ahead of ourselves,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago, adding that the hawkish comments call into question the timing and number of rate cuts that the market anticipates this year.

Traders see a 67% probability of a rate cut in March, according to the CME Fedwatch tool, compared with about a 71% chance seen before the report. Higher rates dim the appeal of gold, which pays no interest.

“There has been a lot of hype behind bitcoin, so people tend to rotate out of different asset classes and that could also be behind some degree of the selling,” Streible added.

Attention will turn to the US producer price index (PPI) due on Friday.

“Gold is just grudgingly lower and (the market) hopes PPI will show softer results tomorrow,” said Tai Wong, a New York-based independent metals analyst.

Silver fell 0.7% to USD 22.71 per ounce, its lowest since Nov. 14.

Platinum lost 0.5% to a one-month low of USD 914.85, and palladium fell 0.9% to USD 989.36.

(Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru; Editing by Barbara Lewis and Shailesh Kuber)