Gold prices frail as dollar and yields dim shine

GOLD PRICES were subdued on Tuesday as the dollar and Treasury yields rose, while traders waited to hear from a slew of US Federal Reserve speakers this week for more clarity on the central bank’s rate cut prospects.

Spot gold was down 0.3% at $2,049.07 per ounce, as of 0617 GMT. US gold futures rose 0.1% to $2,052.70.

Weighing on gold, the dollar has strengthened ahead of Christopher Waller’s speech, which is arguably the bigger event for the week, said Matt Simpson, a senior analyst at City Index.

The dollar index touched a 10day high, making bullion less attractive for other currency holders, while yields on benchmark US 10year Treasury notes rose above 4%.

At least six Fed officials are due to speak this week, with Fed Governor Christopher Waller scheduled to deliver a speech on the economic outlook before the Brookings Institution at 1600 GMT.

“With multiple rate cuts having been priced in by market, I wouldn’t be surprised if Waller feels inclined to push back... a move back to $2035 (for spot gold) could be plausible,” Mr. Simpson said.

At the end of its Jan. 30-31 meeting, the Fed is expected to hold its policy rate steady.

Traders are betting on six rate cuts of 25 basis points each this year, with about a seven-in-10 chance that the first one could come as soon as March, according to LSEG’s interest rate probability app, IRPR.

Lower interest rates increase non-yielding bullion’s appeal.

Elsewhere, European Central Bank officials pushed back against market expectations for rapid rate cuts this year.

Spot silver fell 0.4% to $23.10 per ounce; platinum declined 0.8% to $907.66; and palladium slipped 0.2% to $969.14.