April 19 (Reuters) – Gold prices fell below the key USD 2,000 level on Wednesday as US yields marched higher, with investors turning sceptical about potential US rate cuts later this year.
Spot gold was down 0.5% at USD 1,994.02 per ounce by 1:40 p.m. ET (1740 GMT), having shed as much as 1.8% to a two-week low of USD 1,969.09 earlier in the session. US gold futures settled down 0.6% at USD 2,007.30.
“Once gold breached that USD 2,000 mark, there were a lot of stop losses that were triggered,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
“Anytime you get earnings, you get a lot of people chasing individual stocks and that could also cause them to not invest so much in metal.”
The dollar strengthened 0.2%, underpinned by US yields climbing to a near one-month high, with markets now pricing in an 85% chance of a 25-basis point rate hike at the Federal Reserve’s May 2-3 meeting, according to CME’s FedWatch tool.
St. Louis Fed chief James Bullard said on Tuesday that the US central bank should continue raising interest rates as recent data shows inflation remains persistent while the broader economy seems poised to continue growing, even if slowly.
A stronger dollar weighs on overseas demand for greenback-priced gold, while higher rates blunt non-yielding bullion’s appeal.
Rate-hike expectations for the (Fed’s) May meeting have risen, which has pressured gold back below USD 2,000, at least in the short term, said Standard Chartered analyst Suki Cooper.
Markets will scan more upcoming remarks by Fed officials this week, ahead of a blackout period that starts on April 22 before the central bank’s May meeting.
Silver rose 0.2% to USD 25.27 per ounce, platinum gained 0.7% to USD 1,089.73, while palladium was mostly flat at USD 1,608.47.
(Reporting by Deep Vakil in Bengaluru; Editing by Sherry Jacob-Phillips and Shounak Dasgupta)