Gold slides on trimmed US rate cut bets, rallying equities

Jan 22 – Gold prices eased on Monday as investors rolled back expectations of a US interest rate cut at the end of March, with a surge in equity markets further dampening interest in safe-haven bullion.

Spot gold was down 0.5% at USD 2,020.09 per ounce at 1:49 p.m. ET (1849 GMT).

US gold futures settled 0.3% lower at USD 2022.2.

Technical selling and a rally in stock markets are likely the two main factors limiting buying interest in the gold and silver markets, said Jim Wyckoff, senior analyst at Kitco Metals.

“We have had better US economic data lately, that suggests the Fed may have to hold off longer on lowering interest rates.”

Higher interest rates increase the opportunity cost of holding bullion.

Gold fell about 1% last week, its biggest weekly decline in six, after the US Federal Reserve said it needs to see more inflation data before any rate cut judgment could be made and that the baseline for cuts to start was in the third quarter.

Traders are pricing in about a 41.6% chance that the Fed will cut interest rates in March, according to the CME Fed Watch Tool, compared with more than 70% at the beginning of last week.

Investors are waiting for the US flash PMI report on Wednesday, fourth-quarter advance GDP estimates due on Thursday, and personal consumption expenditures data on Friday for more cues on interest rates.

Spot silver fell 2.1% to USD 22.13 per ounce, platinum was down 0.7% at USD 892.89 and palladium slipped 1% to USD 936.69.

UBS expects platinum to be undersupplied by 300,000 ounces in 2024, for a second consecutive year, mainly on the back of the platinum to palladium substitution in autocatalysts.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Kirsten Donovan, Christina Fincher, and Krishna Chandra Eluri)